Citigroup downgrades Dr.Reddy to sell

HONG KONG, Mar 29 (Reuters) Citigroup has cut its recommendation for Indian drug maker Dr. Reddy's Laboratories Ltd. to ''Sell (3M)'' from ''Buy (1L)'', saying the stock was expensive after an extended rally.

''Our downgrade is primarily a valuations call,'' analyst Prashant Nair said in a morning note on Wednesday, adding that he believed most of the positives had been factored in and the risk reward was unfavourable.

Shares in Dr. Reddy's have risen 49 percent in the last 3 months and outperformed the broad market by 27 percent on the back of a series of positive news flows, Nair said.

Dr.Reddy's shares settled down 1.96 percent at 1,422.40 rupees on Tuesday after hitting a record high of 1,513 rupees on March 22.

Citigroup has a revised target price of 1,516 rupees for the stock, up from 1,187 rupees previously.

REUTERS SB KP0851