Torrent Pharmaceuticals Ltd. share price target

Torrent Pharma (TRP IN) reported decent performance in Q1FY20, with revenue stood at Rs 2,022Cr (vs estimate of Rs 2,017 Cr), which is largely in-line with our estimate. EBITDA at Rs541Cr (estimate of Rs521Cr) and EBITDA margins stood at 26.8% (expanded by ~127bps QoQ).

Torrent Pharma (Torrent) reported an all-round improvement in Q1FY20 and exceed our earnings estimate by 11% (mainly due to 130bps beat on EBIDTA margin). It reported 8%/13.4%/32.5% YoY growth in revenue/EBIDTA/Adj. PAT to Rs20.22bn/Rs5.41/Rs2.16bn, respectively. Q1 revenue growth was added by resumption in supplies of Losaratan in US and improved pricing in India business. The management gave a cautious outlook for US, as new product approvals in US from its Dahej and Indrad facility will be withheld until the resolution of USFDA's Form -483s. We expect the overall performance to remain moderate in FY20 due to weaker traction in US, but will see a recovery in FY21 on normalization of...

While we remain constructive of TRP's domestic business owing to a strong presence in specialty chronic therapies, the slowdown in the US will limit revenue growth to low double digits (~12%) over FY19-21E. With the WL on Dahej, pending approvals in the US will get delayed, thus leaving margin expansion in check (+30bps to 26.2%). The mainstay domestic business will enable yearly FCF of Rs 13bn+ and net debt to drop by ~Rs 20bn over FY19-21E, aiding ~30% EPS CAGR over the period. With the update on Indrad expected soon, we remain cautious on the stock and would suggest entering post a favourable outcome. We maintain NEUTRAL on TRP following an in-line quarter. The domestic business enabled healthy growth in revenue and profitability. Yet, the slowdown in the US will continue for 2-3 quarters. We cut our estimates by ~5% owing to the WL for Dahej and await an update on Indrad. At 24x FY21E EPS, we arrive at a TP of Rs 1,615.

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...

In Q1FY20, Torrent Pharma's revenues have increased by 8% YoY to Rs 20220 mn (our estimates Rs 202380 mn).

Q1FY2020 result of Torrent Pharmaceuticals Limited (Torrent Pharma) showed strong operational performance. Sales for the quarter were in line with estimates at Rs. 2,022 crore, 8% growth y-o-y. Operating profit was 4% above our estimate at Rs. 541 crore, reporting an improvement of 127 BPS y-o-y to 26.8%. Reported profit for the quarter was 8% above our estimate at Rs. 216 crore, showing robust 32.5% growth y-o-y. During the quarter, U.S. business reported 13% y-o-y growth and no new approvals were received during the quarter....

23 July 2019 USD54m (+13% YoY to INR3.8b), supported by new launches and restart of Losartan sales. India revenue grew moderately by 9% YoY to INR9.1b. However, Germany (+4% YoY to INR2.6b) and Brazil (-3% YoY to INR1.7b) businesses exhibited a muted performance. Gross margin improved 210bp YoY (+100bp QoQ) to 72%, as the company discontinued low-margin products in India and capitalized on opportunities in the US due to supply shortage. However, higher employee cost (+40bp YoY to 19.3% largely due to annual increments) and other expenses (+60bp YoY to 27.4%) restricted EBITDA margin expansion to 130bp YoY (26.8% v/s INR1.9b), led by improved margins and a lower tax rate. (a) TRP indicated US sales would come in flat YoY at ~USD220m in FY20 if Indrad also receives OAI (official action indicated) classification. (b) The company has gradually resumed losartan sales to the US market.

Torrent Pharmaceuticals Limited's (Torrent Pharma's) Dahej plant was inspected by the USFDA between March 11-19, 2019. The company received Form 483 with five observations. USFDA classified this inspection to Official Action Indicated (OAI), indicating unsatisfactory response submitted by the company (for Form 483). OAI status does not impact the existing operations of the company. However, new product approvals could get delayed. If the issue is not resolved satisfactorily within the stipulated timeframe, it could result in escalation to a Warning...

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