Dr. Reddy’s Laboratories to Consider First-Ever Stock Split in Over Two Decades
The board of directors of Dr. Reddy’s Laboratories is set to meet on Saturday, July 27, to deliberate on a proposal for the company’s first-ever stock split.
Board of Directors Meet for First-Ever Stock Split
The board of directors of Dr. Reddy’s Laboratories is set to meet on Saturday, July 27, to deliberate on a proposal for the company’s first-ever stock split. Presently, the shares of Dr. Reddy’s have a face value of Rs 5 each. This marks a significant milestone as it will be the first instance the company carries out a split of its equity share since becoming a public entity. Notably, this stock split will also encompass the American Depository Shares (ADRs), pending approval from the company’s shareholders.
Expansion in Nicotine Replacement Therapy
Last month, Dr. Reddy’s announced a significant strategic move by its subsidiary, Dr. Reddy’s Laboratories SA. The subsidiary signed a definitive agreement with Haleon plc and its associate companies to acquire a global portfolio of consumer healthcare brands in the Nicotine Replacement Therapy (NRT) category, excluding the United States. This acquisition involves purchasing shares of Northstar Switzerland SARL, a Haleon group company. The transaction is valued at GBP 500 million, with an upfront cash payment of GBP 458 million and performance-based contingent payments of up to GBP 42 million, payable in 2025 and 2026.
Financial Performance and Market Reaction
Despite these strategic moves, the company’s financial performance in the March quarter did not meet market expectations. Dr. Reddy’s reported an EBITDA margin of 26.4% for the quarter, which was below the anticipated figures. Nonetheless, the stock has shown resilience. Shares of Dr. Reddy’s Laboratories recently hit a fresh 52-week high of Rs 6,938.90, though they are currently trading at Rs 6,812.15. The stock has appreciated by 6.5% in July and has seen an overall increase of 17.7% in 2024.
Looking Ahead
The upcoming board meeting and potential stock split, along with the strategic acquisition in the NRT category, position Dr. Reddy’s Laboratories for notable growth and expansion. Shareholders and investors will be keenly observing the developments and their impact on the company’s market performance.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.