The company made the announcement during trading hours on Wednesday, 30 September 2009. After the announcement, the stock had shed 4.81% in intraday on Wednesday, but managed to close 0.05% higher at Rs 988.10 after the company said it saw no material financial impact from the recall and the recall of the drugs was being conducted with the knowledge of the US Food and Drug Administration.
Meanwhile, the BSE Sensex was down 1.41 points, or 0.01%, to 17125.43.
On BSE, 75,685 shares were traded in the counter as against an average daily volume of 87,396 shares in the past one quarter.
The stock hit a high of Rs 983 and a low of Rs 955 so far during the day. The stock had hit a 52-week high of Rs 1018.50 on 29 September 2009 and a 52-week low of Rs 357 on 5 March 2009.
The selling pressure in the stock today was due to profit booking after the stock rose 14.45% in five preceding sessions to Rs 988.10 on 30 September 2009, from Rs 863.30 on 22 September 2009.
The stock had outperformed the market over the past one month till 30 September 2009, rising 21.14% as compared to the Sensex 7.56% rise. It outperformed the market in past one quarter, gaining 27.03% as against 18.17% rise in the Sensex.
The large-cap drug maker has an equity capital of Rs 84.37 crore. Face value per share is Rs 5.
The current price of Rs 965.50 discounts the company's Q1 June 2009 annualised EPS of Rs 53.94, by a PE multiple of 17.89.
Last week, a leading foreign broker raised its rating on shares of Dr Reddy's Lab to 'overweight' from 'equal-weight', by saying investors may have 'underappreciated' the company's upcoming products for the US market.
The Dr Reddy's Lab stock was in demand recently after reports suggested that UK-based GlaxoSmithKline Plc is looking for potential acquisitions in the Indian market and has shortlisted Dr Reddy's Laboratories (DRL) and Piramal Healthcare for the proposed acquisition.
According to reports, GSK's strategy to consolidate its presence in India is similar to that of its global rivals such as Pfizer Inc., Sanofi Aventis SA, and Daiichi Sankyo Co. Foreign drug makers want to ensure sustained supply of cheap off-patent drugs or generics from India to cater to the global market. At least $70 billion worth of patented drugs will go off patent by 2012.
India's Rs 35,000 crore drug market, which is expanding by 14-15% a year, is another reason for multinationals to look seriously at the country.
In June 2009, DRL entered into a strategic alliance with GlaxoSmithKline Plc to develop and market select products across emerging markets outside India. Under the terms of the agreement, GSK will gain access to DRL's diverse portfolio and future pipeline of more than 100 branded pharmaceuticals in fast growing therapeutic segments such as cardiovascular, diabetes, oncology, gastroenterology and pain management.
Dr Reddy's Lab is engaged in manufacturing and marketing pharmaceutical products. The group operates in seven segments: generics, active pharmaceutical ingredients (API) and intermediates, formulations, critical care and biotechnology, custom pharmaceutical services, drug discovery and others.
Dr Reddy's Holdings, a promoter group entity pledged more than 1.12 crore shares or 6.65% equity of the company. Dr Reddys Holdings held 23.20% stake in the company, while the total promoter shareholding is 25.80% (as on 30 June 2009).