Torrent Pharmaceuticals Ltd. share price target

Torrent Pharma (TRP IN) has demonstrated robust track record in domestic formulation by building its core competence around chronic and sub-chronic therapeutic area and witnessed healthy revenue growth of ~15% CAGR over FY14-19

We believe TRP is not in faults for discontinuing the sales of two sartan products in the US as the USFDA has changed its rules related to sartan impurities frequently over FY19. Despite cutting our FY20/21E EPS estimates by 14/13% and downgrading the stock to Neutral on account of US, we maintain our target multiple at 24x P/E, as we remain constructive on TRP's lucrative India business which we value at Rs ~1,200/sh (70% of CMP). We believe the growth in India and other businesses will enable TRP to shed ~Rs 16bn net debt over the next two years, aiding ~35% EPS CAGR. Any overreaction on the stock in the near term should be taken as an opportunity to enter. We downgrade TRP to NEUTRAL following a 13% earnings cut owing to several headwinds in the US biz, which will persist over the next 4-6 quarters, in our view. Our revised TP is Rs 1,745/sh (24x FY21E EPS).

India growth steady; acquisitions to enhance coverage Domestic branded formulations including CRAMs constitute 48% of sales. The acquisition of Elder Pharma's branded portfolio has added new therapies like neutraceuticals, gynaecology and helped fill up portfolio gaps. The Unichem acquisition has added branded portfolio comprising some power brands besides achievement of long term synergy benefits. We expect India sales to grow at ~9% CAGR in FY19-21E to | 3834 crore. US, Germany, Brazil key export destinations for company...

Torrent Pharmaceuticals Ltd. is the flagship company of the Torrent Group.

Torrent reported a strong 39% YoY growth in revenue in Q3FY19 led by robust formulation sales growth across India, US and Germany. While, India business reported stellar performance with 42.5% YoY revenue growth led by acquisition of Unichem portfolio, US sales rose by 84% YoY led by volume growth, new launches and market share gains....

Revise TP to Rs 1,860 (22x Dec-20E EPS). Torrent Pharma (TRP) reported in-line numbers in 3QFY19. Revenue adjusted for a one-time payment was at Rs 19.8bn, up 35/5% YoY/QoQ. This was largely driven by 43% YoY growth in India (on a low base) and 60% YoY jump in US revenues. EBITDA at Rs 5.2bn was up 47% YoY/ 6% QoQ (in-line) with margin at 26.5%, up 215bps YoY/ flat QoQ. Adjusted PAT at Rs 2.2bn (+ 280/13% YoY/QoQ) was aided by lower tax rate at 10.5% owing to a one-off tax credit. Tax rate is likely to normalize in FY20.

ICICI Securities Ltd | Retail Equity Research Q3Y19 results were better than I-direct estimates mainly due to higher US sales, one-off settlement income and better-than-expected EBITDA margins. Revenues grew 38.9% YoY to | 2051 crore (I-direct estimate: | 1948.3 crore) due to consolidation of Unichem, strong US sales and one-off patent related income (| 63 crore) EBITDA margins improved 305 bps YoY to 27.4% YoY (I-direct estimate: 25%), Adjusting for one-offs, margins were at 26.5%...

Maintain BUY with a TP of Rs 1,800 (22x Sep-20E EPS) Torrent Pharma (TRP) reported in-line numbers in 2QFY19. Revenue at Rs 18.9bn was up 33/1% YoY/QoQ, (in-line) with 34%YoY growth in India and 54%YoY jump in US revenues. EBITDA at Rs 4.7bn was up 44%YoY/ down 1%QoQ (6% miss) with margin at 25%, up 200bps YoY/ down 50bps QoQ. This was impacted by a penalty amounting to Rs 150mn included in other expenses, adjusting for which, the EBITDA margin came in at 26% (in-line).

Torrent Pharma(Torrent) Q2FY19 Sales/ EBITDA/PAT were at Rs19bn/Rs4.7bn/Rs1.8bn ahead our expectations by 5.9%/11.6%/4.1% respectively. Higher than expected growth in US (due to 1)new launches,2)favourable currency movement and 3) integration of BioPharm) and India (due to 1)strong growth in brands acquired from Novartis,2)Unichem consolidation) supported margin improvement. EBITDA margins were at 25% (est. of 23.7%) up YoY from 23.2% given better sales mix with ~70% contributed by chronic and sub-chronic portfolio. PAT was down 12.3% YoY at Rs1,790mn given higher interest, depreciation and lower other income.We expect Torrent's Sales/EBITDA/net profit to grow at a CAGR of...

India growth steady; Elder, Unichem acquisitions to enhance coverage Domestic branded formulations including CRAMs (46% of sales) have grown at 11% CAGR in FY13-18, driven by chronic focus and Elder acquisition. The acquisition of Elder Pharma's branded portfolio has added new therapies like neutraceuticals, gynaecology and helped fill up portfolio gaps. The Unichem acquisition is likely to bring in ~| 900 crore of branded portfolio comprising some power brands besides achievement of long term synergy benefits. We expect India sales to...