Sanford Bernstein has an outperform rating on Dr Reddys Laboratories (DRL). Nithya Balasubramanian, Director at Sanford Bernstein, believes that the Sputnik V COVID-19 vaccine could be EPS dilutive for Dr Reddy’s as of now.

“We believe that this product (Sputnik V) is probably EBITDA dilutive to the company at the moment. We estimate EBITDA of around 15-18 percent in this product."

"However, this is a one-time opportunity so the way we value the opportunity is we do an NPV for this revenue and the profit stream and for the rest of the company we do what everybody else does which is give them a multiple on one year forward earnings,” she told CNBC-TV18.

Balasubramanian also expects the pricing for the vaccine to come down once Indian manufacturing starts.

“We know what the private market pricing is today, but we are also assuming that the pricing could come down once Indian manufacturing facility starts supporting the demand for the product."

"We know that DRL has the right to sell the first 250 million doses in India; we believe that they should be able to sell anywhere between 150-200 million doses of that at least,” she said.

Watch the video for more.

(Edited by : Bivekananda Biswas)