Dr. Reddy's Laboratories Limited (RDY) Discounted Future Market Cap

Dr. Reddy's Laboratories Limited

RDY (NYSE)

(%)

Valuation
Dr. Reddy's Laboratories Limited Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Model Info

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	23.66 USD
Estimated net income	1.53 Bil. USD
Estimated market capitalization	25.82 Bil. USD
Market capitalization discounted to present	19.69 Bil. USD
Shares Outstanding	832 Mil.
Earnings Per Share (EPS)	0.78 USD
Market Price	13.09 USD
Price to Earnings (PE) Ratio	16.89

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-03-31", "y": 2332996640}, {"l": "2017", "x": "2017-03-31", "y": 2169866690}, {"l": "2018", "x": "2018-03-31", "y": 2180129800}, {"l": "2019", "x": "2019-03-31", "y": 2213915890}, {"l": "2020", "x": "2020-03-31", "y": 2316942000}, {"l": "2021", "x": "2021-03-31", "y": 34903111}, {"l": "2022", "x": "2022-03-31", "y": 2823529470}, {"l": "2023", "x": "2023-03-31", "y": 2991609793}, {"l": "2024", "x": "2024-03-31", "y": 3346897196}, {"l": "2025", "x": "2025-03-31", "y": 3808853905}, {"l": "2026", "x": "2026-03-31", "y": 4761067381, "oy": 4761067381, "e": true, "d": 2026, "g": 25.0, "og": 25.0}, {"l": "2027", "x": "2027-03-31", "y": 5951334226, "oy": 5951334226, "e": true, "d": 2027, "g": 25.0, "og": 25.0}, {"l": "2028", "x": "2028-03-31", "y": 7439167783, "oy": 7439167783, "e": true, "d": 2028, "g": 25.0, "og": 25.0}, {"l": "2029", "x": "2029-03-31", "y": 9298959729, "oy": 9298959729, "e": true, "d": 2029, "g": 25.0, "og": 25.0}, {"l": "2030", "x": "2030-03-31", "y": 11623699661, "oy": 11623699661, "e": true, "d": 2030, "g": 25.0, "og": 25.0}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-03-31", "y": 301796040}, {"l": "2017", "x": "2017-03-31", "y": 185520990}, {"l": "2018", "x": "2018-03-31", "y": 150522100}, {"l": "2019", "x": "2019-03-31", "y": 270460050}, {"l": "2020", "x": "2020-03-31", "y": 258738460}, {"l": "2021", "x": "2021-03-31", "y": 3171270}, {"l": "2022", "x": "2022-03-31", "y": 310390560}, {"l": "2023", "x": "2023-03-31", "y": 548330189}, {"l": "2024", "x": "2024-03-31", "y": 667595476}, {"l": "2025", "x": "2025-03-31", "y": 661581197}, {"l": "2026", "x": "2026-03-31", "y": 626080360, "oy": 626080360, "e": true, "d": 2026, "g": -5.37, "og": -5.37}, {"l": "2027", "x": "2027-03-31", "y": 782600450, "oy": 782600450, "e": true, "d": 2027, "g": 25.0, "og": 25.0}, {"l": "2028", "x": "2028-03-31", "y": 978250563, "oy": 978250563, "e": true, "d": 2028, "g": 25.0, "og": 25.0}, {"l": "2029", "x": "2029-03-31", "y": 1222813204, "oy": 1222813204, "e": true, "d": 2029, "g": 25.0, "og": 25.0}, {"l": "2030", "x": "2030-03-31", "y": 1528516505, "oy": 1528516505, "e": true, "d": 2030, "g": 25.0, "og": 25.0}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-03-31": 26, "2027-03-31": 27, "2028-03-31": 28, "2029-03-31": 29, "2030-03-31": 30}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-03-31	2027-03-31	2028-03-31	2029-03-31	2030-03-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Mar 31	LTM Jan 16	2026 Mar 31	2027 Mar 31	2028 Mar 31	2029 Mar 31	2030 Mar 31
Revenue	3,809	3,788	4,761	5,951	7,439	9,299	11,624
Revenue Growth Rate	13.8%	-0.535%	25%	25%	25%	25%	25%
Net Income	661.6	649.1	626.1	782.6	978.3	1,223	1,529

Monetary values in USD

amounts except #

2025
Mar 31

LTM
Jan 16

2026
Mar 31

2027
Mar 31

2028
Mar 31

2029
Mar 31

2030
Mar 31

Revenue

3,809

3,788

4,761

5,951

7,439

9,299

11,624

Revenue Growth Rate

13.8%

-0.535%

25%

Net Income

661.6

649.1

626.1

782.6

978.3

1,223

1,529

Historical Values

Monetary values in USD amounts except #	Average	LTM Jan 16	2025 Mar 31	2024 Mar 31	2023 Mar 31	2022 Mar 31	2021 Mar 31	2020 Mar 31	2019 Mar 31	2018 Mar 31	2017 Mar 31	2016 Mar 31
Revenue	2,546	3,788	3,809	3,347	2,992	2,824	34.9	2,317	2,214	2,180	2,170	2,333
Cost of Revenue	1,114	1,651	1,581	1,385	1,296	1,324	17.18	1,069	1,013	1,009	962.4	941.4
Gross Profit	1,433	2,138	2,228	1,961	1,695	1,499	17.72	1,247	1,201	1,171	1,207	1,392
Gross Margin	55.56%	56.43%	58.5%	58.61%	56.67%	53.1%	50.78%	53.84%	54.23%	53.72%	55.65%	59.65%
Operating Income	443.9	790.1	840.6	812	695.3	388.2	5.89	212.2	300.6	182.9	208	446.7
Operating Margin	16.45%	20.85%	22.07%	24.26%	23.24%	13.75%	16.88%	9.16%	13.58%	8.39%	9.59%	19.15%
Net Income	364.3	649.1	661.6	667.6	548.3	310.4	3.17	258.7	270.5	150.5	185.5	301.8
Net Margin	13.15%	17.13%	17.37%	19.95%	18.33%	10.99%	9.09%	11.17%	12.22%	6.9%	8.55%	12.94%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Jan 16	2025 Mar 31	2024 Mar 31	2023 Mar 31	2022 Mar 31	2021 Mar 31	2020 Mar 31	2019 Mar 31	2018 Mar 31	2017 Mar 31	2016 Mar 31
Revenue	2,546	3,788	3,809	3,347	2,992	2,824	34.9	2,317	2,214	2,180	2,170	2,333
Revenue Growth Rate	720.1%	-0.535%	13.8%	11.88%	5.95%	7,990%	-98.49%	4.65%	1.55%	0.473%	-6.99%	-1.73%
Net Income	364.3	649.1	661.6	667.6	548.3	310.4	3.17	258.7	270.5	150.5	185.5	301.8
Net Margin	13.15%	17.13%	17.37%	19.95%	18.33%	10.99%	9.09%	11.17%	12.22%	6.9%	8.55%	12.94%
Net Income Growth Rate	880.7%	-1.89%	-0.901%	21.75%	76.66%	9,688%	-98.77%	-4.33%	79.68%	-18.87%	-38.53%	-15.06%
Stockholders Equity	2,226	4,034	3,901	3,364	2,810	2,509	32.33	27.19	2,017	1,941	1,912	1,935
Equity Growth Rate	695.1%	3.41%	15.97%	19.68%	12%	7,662%	18.91%	-98.65%	3.93%	1.55%	-1.23%	8.54%
Return on Invested Capital (ROIC)	88.04%	14.09%	15.39%	18.45%	18.53%	11.69%	12.31%	831.3%	10.7%	5.32%	9.5%	21.19%
After-tax Operating Income	343	604.3	626.7	629.1	519.1	283.3	3.85	229.5	251.7	125.1	170.9	329.4
Income Tax Rate	22.04%	23.52%	25.45%	22.52%	25.34%	27.03%	34.74%	-8.13%	16.25%	31.62%	17.84%	26.26%
Invested Capital	2,283	4,289	4,071	3,409	2,801	2,423	31.24	27.61	2,353	2,353	1,798	1,554