The share price of Dr Reddy’s Laboratories gained over 3 percent in early trade on Tuesday after the Drug Controller General of India (DCGI) approved restricted emergency use of Russian COVID-19 vaccine ‘Sputnik V’ in India.

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The stock, however, succumbed to profit-booking after opening higher. At 11:04 am, the shares were trading 2.71 percent lower at Rs 4,854 apiece on the BSE.

Dr Reddy’s Laboratories has been conducting small clinical trials with Sputnik V in India since it entered into a deal with the Russian Direct Investment Fund (RDIF).

“The vaccine has been registered in India under the emergency use authorization procedure based on results of clinical trials in Russia as well as positive data of additional Phase III local clinical trials in India conducted in partnership with Dr Reddy’s Laboratories,” RDIF said.

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DCGI gives nod for emergency use of Sputnik V vaccine for COVID-19

The roll-out of Sputnik V will begin at the end of April or in early May. The vaccine will be priced lower for India and RDIF is working out solutions with the government, its CEO Kirill Dmitriev told CNBC-TV18.

India became the 60th country to approve emergency use authorisation (EUA) of Sputnik V. RDIF is looking to produce over 850 million doses per year, making India the main production hub for the vaccine.

Also Read: CNBC-TV18 Exclusive: Russia's Sputnik V vaccine to be rolled out in April-May

Brokerage firm Citi said that Sputnik V can be a $200 million EBITDA opportunity in the bull case. It translates into an NPV of Rs 67 percent for Dr Reddy’s Laboratories.

However, Citi notes that the upside can be lower if the entire 250 million dosages are not procured in India and if the prices are lower than its assumption.

Citi maintains a Buy call with a target price of Rs 5,400 per share.

JP Morgan is of the view that the vaccine approval may help the company in the near-term upside but uptake remains crucial and clarity is needed on several details such as initial import volume, pricing and logistics details.

The brokerage believes that the Sputnik V supplies will increase the company’s FY22 EBITDA by 10 percent and this is a limited time supply opportunity at this point. It maintained a Neutral call with a target price of Rs 4,850 per share.

Bernstein said that the pricing of the Sputnik V vaccine is low in the public market and the earnings impact due to the vaccine will be minimal for the company till the private market opens up. It has an Outperform rating on Dr Reddy’s Labs with a target price of Rs 5,225 per share.

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First Published:Apr 13, 2021 11:11 AM IST