Dr Reddy's Labs shares in focus after I-T dept issues order over Rs 2,396 crore tax demand

Time of India

2 days ago

Shares of
Dr Reddy's Laboratories
will be in focus on Monday after the pharmaceutical major received a
tax demand
of over Rs 2,395 crore from the
Income Tax Department
for the assessment year 2020–21. The demand is linked to the merger of Dr Reddy's Holdings into Dr Reddy's Laboratories under a scheme of amalgamation.
The company disclosed receiving a show cause notice on April 4, 2025, from the I-T Department. This notice required Dr Reddy's to demonstrate why its tax returns for the Assessment Year 2020-21 should not be reassessed.
Following the company's response to this initial notice, the Income Tax Authority issued an Order on May 30, 2025, justifying the demand notice.
Dr Reddy's has stated that the scheme of amalgamation, which was approved by the National Company Law Tribunal (NCLT) in Hyderabad on April 5, 2022, with an effective date of April 1, 2019, was carried out in adherence to all legal requirements, including tax laws.
The company added that it 'strongly believes there has been no escapement of income' due to the amalgamation. It also stated that the development is not expected to have any material impact on its financials, operations, or activities at this stage, and it is currently reviewing the order and taking necessary steps.
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'Based on our assessment, there is no material impact on the financials, operations, or other activities of the company at this stage,' it said in a statement.
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Dr Reddy's Labs share price target
According to Trendlyne, the average target price for Dr Reddy's Labs is Rs 1,271, indicating a potential upside of nearly 2% from current levels. Among 38 analysts covering the stock, the consensus rating is 'Hold'.
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Shares of Dr Reddy's are down 9% year-to-date but have risen 12% over the past three months. The company's current market capitalisation stands at Rs 1,04,448 crore.
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