Torrent Pharmaceuticals Ltd. share price target

Maintain BUY with a revised TP of Rs 1,660 (22x Dec-19E EPS). Torrent Pharma (TRP) reported good numbers in 3QFY18, with the top-line coming in at Rs 14.8bn, up 2% YoY. This was largely in-line with estimates, as the domestic business continues to drive growth (+17% YoY). The US business picked up slightly, growing 4% QoQ. EBITDA came in at Rs 3.6bn, up 14% YoY, a margin of 23.4%.

Margins expand; Improvement in US business remains key TRP reported sales of INR14.3b (+4.5% YoY; ~5% miss) in 3QFY18. The miss on revenue can be attributed to a decline in the US and Brazilian businesses. India business grew 22% YoY to INR6.1b (~23% growth adj. for GST). EBITDA increased 14% YoY to INR3.53b (est. of INR3.62b). Margin expanded ~195bp YoY (+130bp QoQ), primarily due to a favorable product mix toward higher-margin branded products. PAT declined 72% YoY to INR580m, mainly due to a one-time impact of the Unichem acquisition and the re-measurement of deferred tax on account...

Upward estimates for FY19 and rating to ACCUMULATE We expect the Unichem dheal to take a closure by 31/12/2017, hence expecting some pain on the BS for FY18E with increased Debt and reduced Cash, however, with synergies with the deal and traction in the other regions and higher number of launches in the US would provide impetus to the valuation. We expect sales to grow...

ICICI Securities Ltd | Retail Equity Research Revenues came in flat YoY at | 1429 crore, below I-direct estimate of | 1542 crore mainly due to 21% YoY decline in the US to | 255 crore (I-direct estimate: | 281 crore) and 24% YoY decline in Brazil to | 120 crore (I-direct estimate: | 188 crore). Domestic business, on the other hand, grew 22% YoY to | 607 crore (I-direct estimate: | 546 crore) EBITDA margins were flat at 23% YoY (I-direct estimate: 21.0%). EBITDA remained flat YoY at | 329 crore...

Owing to the enhanced business mix, which will ensure the sustainability of future cash flows, we have increased our assigned earnings multiple from 20x to 22x, and maintain BUY with a TP of Rs 1,480 (22x Sep-19E). After the acquisition of Unichem Labs (UL) domestic portfolio, Torrent Pharma (TRP) will become the fifth largest player in the Rs 1.14tn Indian Pharma market (IMS data). Closed at a value of Rs 36bn, this deal will (1) Further strengthen TRPs position in CVS, CNS and GI categories owing to a complementary sub-therapy presence, (2) Add ~3,000 employees (including MRs) and provide access to an additional 2,100 stockists pan-India, (3) Give TRP an entry into the Indian OTC market, with the growing Unienzyme brand of UL.

Big leap- to become top-5 player: Torrent has entered into a definitive agreement with Unichem to acquire its branded business of India and Nepal for INR36b on slump sale basis (transaction closure expected by 2017 end). Through this acquisition, Torrent will acquire >120 brands in India and Nepal and manufacturing plant at Sikkim. Building leadership position through strings of acquisitions: This is the fifth acquisition in India by Torrent pharma in last 4 years (Brands from Elder and Novartis, manufacturing plants from Zyg Pharma and Glochem). According to...

Maintain BUY with a TP of Rs 1,450 (20x Jun-19E). Despite a 9% decline in the India business, sequentially flat sales in the US and strong rupee appreciation during the last quarter, Torrent Pharma (TRP) reported 100bps QoQ improvement in EBITDA margin (21.6%) and 500bps higher gross margin, leading to a PAT of Rs 1.8bn (57% beat on our earnings estimates). Management has attributed this to the improved product mix in the US and Brazil markets, and price hikes in the India business.

Revenues declined 11% YoY to | 1374 crore (I-direct estimate: | 1421 crore) mainly due to high base of gAbilify exclusivity in the US. US revenue declined 37% YoY to | 272 crore (I-direct estimate: | 261 crore). Domestic revenue declined 9% YoY to | 464 crore (Idirect estimate: | 428 crore) mainly due to GST transition EBITDA margins declined to 21.6% (I-direct estimate: 20.0%) against 28.3% in Q1FY17. EBITDA fell 32% YoY to | 297 crore Net profit fell 36% YoY to | 188 crore (I-direct estimate: | 164 crore) mainly on account of lower operational performance...

Q1FY18 revenues were down 10.9% YoY lower than our forecast by 4.6%. EBITDA margin of 20.1% were lower than our estimates of 20.5%, mainly on the back of increased staff and other expenses. However, PAT of Rs1.88bn, -35.6% YoY, was 8.5% lower than our estimates given higher tax rate. India business traction a little slower owing to GST and slower-than-expected pickup from Novartis brands, 8-10 launches in US and volume growth in Brazil to...

US contribution continues to reduce owing to the pricing pressure in the base business and lower FTF launches. In FY17, TRP filed 17 ANDAs of which 6 were FTFs. Focus on filings in specialty segments like dermatology, oncology and ophthalmology will help sustain EBIDTA. About 5-6 pending launches and with 10-12 launches every year in FY18/19E we estimate US...