Target: ₹1,400CMP: ₹1,245.50Dr Reddy’s Laboratories gets temporary setback with stoppage of Semaglutide supplies due to impurity issues associated with API. The next step will be company revalidating process again and testing which should be completed by Sept/Oct 2026; post that commercial supplies may resume. The company may recognise an inventory write-down on the affected batches however no product recalls.Currently there are only two generic players (Dr Reddy’s and Apotex) which have got an approval. We believe there are more 4-5 players towards getting approval. Any delay in commercial supply from Dr Reddy’s will take away first mover advantage. There is no need to submit any documents to Canadian regulator or others as validation batches is a scale up process and does not change the specification.Our FY27E stands cut by 5 per cent while FY28E largely remains unchanged. We have factor in $180 million of sales from Sema in FY28.The company has been reporting an OPM at 15-16 per cent ex gRevlimid. Scale up in Sema along with reducing opex will be key to achieved 19-20 per cent OPM. Further timely launches like bAbatacept can accelerate profitability from H2-FY28E.We maintain our Accumulate rating on stock with TP of ₹1,400/share (23x FY28E EPS). Delay in re-entry of Semaglutide beyond H2FY27 will be key risk to our call.Published on July 10, 2026