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Torrent Pharma Q1FY23 Review: Robust branded franchisee; margins to trend up
What's Buzzing
Torrent Pharma’s Q1FY23 revenues were in line with I-direct estimates while margin profile was better than our expectations.
Context
Revenues grew 10% YoY to Rs 2347 crore. Domestic formulations grew 14% YoY to Rs 1245 crore driven by outperformance of top brands together with new launches and market share gains across focus therapies while 20% YoY growth to Rs 184 crore in Brazil was witnessed due to strong growth in generic segment, performance of top brands and new launches. US business grew 12% YoY to Rs 299 crore mainly due to one-time settlement income of Rs 38 crore in this quarter. Growth was partially offset by 18% YoY decline in Germany to Rs 214 crore amid increase in competition and loss of tenders in previous quarters. EBITDA margins declined 139 bps YoY to 30.3%, above I-direct estimate of 28%. EBITDA grew 5% YoY to Rs 712 crore. Subsequently, adjusted profit improved 7% YoY to Rs 354 crore.
Our perspective
Torrent's branded businesses growth momentum was led by the India performance. The management's cost optimisation measures have helped to get back on track with respect to margins in this quarter while India and Brazil business continue to be on a strong footing. Torrent has initiated measures to improve price competitiveness in Germany. Torrent continues to impress thanks to thoughtful capital allocation and robust margin profile, which can be attributed to a global portfolio of branded generics. The company’s portfolio is finely balanced between India, Brazil, Germany and the US with India being the leader. We expect India and Brazil branded franchise to continue their outperformance.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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