Dr. Reddy's Laboratories heads into its May 20 results with short sellers building positions at the fastest weekly pace in months — the clearest pre-earnings signal in an otherwise quiet positioning picture.
The dominant story is the sharp rise in borrowed shares. Short interest climbed 21% over the past week to roughly 16.2 million shares, a move that started on May 8 and has accelerated every session since. That pace is striking for an ADR that had been consolidating short interest through most of April. The borrow market has tightened alongside it: availability has dropped to around 61% — meaning only about three shares remain available for every five already borrowed — down from nearly 93% a week ago. Cost to borrow remains low in absolute terms at 0.59%, but it has risen 21% over the week, tracking the surge in demand for borrows. With a short score of 54.7 and days-to-cover at 8.6, the lending market reads as notably more congested heading into the event than it was even two weeks ago.
Options positioning tells a sharply different story — and the contrast matters. Call demand is overwhelming put demand right now. The put/call ratio collapsed to 0.15 on May 18, its lowest reading in months and well below the 20-day average of 0.37. That is the signature of aggressive call buying, not hedging. For most of May, the PCR was running above 1.0, reflecting genuine downside protection activity, but that flipped dramatically in the final days before the print. The divergence between rising short interest and a PCR near multi-month lows suggests two distinct investor cohorts are leaning in opposite directions ahead of tomorrow's announcement.
On fundamentals, the setup gives both camps something to work with. Revenue grew just 3.2% year-on-year to $3.49 billion, and the gross margin of 52.8% is respectable for a generic-heavy pharma. The P/E of roughly 23x and EV/EBITDA near 14x are not cheap, but they are defensible for a company sitting on net cash and generating nearly $590 million in operating cash flow. The dividend score ranks in the 91st percentile, reflecting a consistent payout history, while the EPS surprise rank at the 12th percentile shows the company has a mixed record on beating estimates. On the institutional side, BlackRock added nearly 1.3 million shares as of April 30, and Boston Partners built a sizeable position in Q1, adding over 4 million shares — meaningful vote of confidence from two active managers with genuine conviction signals. Recent analyst data is stale and should be treated with caution, but the most recent coverage from Barclays (Overweight) and HSBC (upgraded to Buy in mid-2025) points to a broadly constructive Street view.
Wednesday's print is therefore less a referendum on whether Dr. Reddy's is a quality franchise and more a test of whether the acceleration in short interest reflects genuine concern about the quarter — or simply pre-event hedging that the call-buyers expect to unwind quickly.
See the live data behind this article on ORTEX.
Open RDY on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
