Dr Reddy's Laboratories Ltd reported a weaker-than-expected March quarter performance, weighed down by lower sales in North America and the impact of g-Revlimid-related adjustments.

Brokerages largely flagged pressure on earnings and margins during the quarter, though some continued to remain constructive on the drugmaker's long-term growth prospects, driven by semaglutide and biosimilars.

Motilal Oswal Financial Services Ltd (MOFSL) said, "Dr Reddy's Labs delivered lower-than-expected Q4 performance with a 4 per cent/32 per cent/43 per cent miss on sales/EBITDA/PAT. These misses were after adding shelf-stock adjustments related to g-Revlimid. Reduced sales in North America (NA) considerably hurt the performance for the quarter."

"After three years of robust growth in NA sales over FY22-25, FY26 witnessed a 23 per cent YoY decline in sales, led by increased competition in g-Revlimid. DRRD had 25 launches in FY26, offsetting the adverse impact to some extent," it added.

MOFSL maintained its 'Neutral' rating on Dr Reddy's while cutting the target price to Rs 1,195.

Nuvama Institutional Equities highlighted Q4 as a "poor quarter". "Dr Reddy's Labs had a weak Q4FY26 with 12 per cent/48 per cent/68 per cent YoY decline in revenue/adjusted EBITDA/adjusted PAT and missing consensus estimates. The decline was led by a drop in gRevlimid sales and a significant Rs 450 crore shelf stock adjustment. Margins were also under pressure due to one-off items, including impairment charges."

"With the end of gRevlimid, the key story now revolves around Dr Reddy's commercial success with Semaglutide in Canada and Abatacpet approval in US/Europe. Dr Reddy's guided for double-digit growth, ex-gRevlimid in the US business. The margin is guided to remain between 22–25 per cent. We cut the TP from Rs 1,600 to Rs 1,550 (24x 12M Sept-27 EPS); retain 'BUY'. At CMP, the stock trades at 23x/17x FY27E/28E EPS," the brokerage added.

Choice Institutional Equities said, "Strong Growth Visibility Backed by Semaglutide and Biosimilar Scale-up. Despite headwinds in Q4 FY26, we maintain a positive view on the company as the majority of the impact was one-off in nature. We expect growth to be driven by Semaglutide launch in India, Canada and Brazil (expected in FY27E), with limited competition from Indian players in Canada. Additionally, planned biosimilar launches along with innovative product launches in India should support margin expansion."

"Factoring in the one-offs, we revise FY27/28E estimate downwards by 12.5 per cent/10.4 per cent. However, given the company's evolving portfolio mix towards complex generics, biosimilars and innovative products in India, we raise our target multiple by 10 per cent. Our revised TP stands at Rs 1,335 with an ADD rating. This implies a PEG of 0.7x, reinforcing the attractiveness of valuation," it stated.

Meanwhile, shares of Dr Reddy's settled 0.25 per cent higher at Rs 1,273.30.