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Torrent Pharmaceuticals Ltd>
  • CMP : 2,831.3 Chg : -26.85 (-0.94%)
  • Target : 1,720.0 (10.47%)
  • Target Period : 12-18 Month

27 Jan 2023

Branded business continues to influence numbers…

About The Stock

Incorporated in 1959, Torrent remains a key play in branded generics (~60% of sales) with strong India franchise and growing exports traction.

  • Revenues – India including CRAMs (59.8%), Brazil (8.3%), US (11.3%) and Germany (10.4%)
  • Torrent is the eighth largest domestic player and is ranked in top 10 for CVS, CNS, V&M, GI and anti-diabetes therapies in India

Growth in revenues boosted by branded generic markets i.e. India and Brazil.

  • Revenues grew 18.3% YoY to ₹ 2491 crore
  • EBITDA margins expanded ~361 bps YoY to 29.1%. EBITDA increased 35.1% to ₹ 724 crore
  • PAT increased 13.73% YoY to ₹ 283 crore
What should Investors do?

Torrent’s share price has grown at a CAGR of 15.90% over the past three years.

  • We maintain HOLD as the current price factors in potential upside from the branded business
Target Price and Valuation

Valued at ₹ 1720 i.e. 32x FY25E EPS of ₹ 53.8

Key Triggers for future price performance
  • In India, Torrent has expanded field strength by ~300 MRs. Also, it forayed into fast growing trade generic segment for acute therapies
  • Torrent has a good presence in Brazil and expects traction for new launches in branded space while Germany tender business to recover in H2FY23
  • Awaiting clearance for Dahej and Indrad facility from the USFDA. New launches are key to offsetting persisting price erosion in business
Alternate Stock Idea

Apart from Torrent, in healthcare coverage we like Cipla.

  • Cipla has a long-drawn strategy of targeting four verticals viz. One-India, South Africa & EMs, US generics & specialty and lung leadership
  • BUY with a target price of ₹ 1290

Key Financial Summary

Particulars FY20 FY21 FY22 5 Year CAGR(FY17-FY22) FY23E FY24E FY25E 2 Year CAGR (FY23E-FY25E)
Revenues 7,939.0 8,005.0 8,508.0 9,557.5 9.8 10,645.2 11,674.8 10.5
EBITDA 2,170.0 2,480.0 2,431.0 2,836.6 16.0 3,178.6 3,502.5 11.1
EBITDA margins (%) 27.3 31.0 28.6 29.7 - 29.9 30.0 -
Net Profit 1,025.0 1,252.0 1,084.4 1,229.9 12.6 1,527.1 1,821.4 21.7
EPS (|) 30.3 37.0 32.0 36.3 - 45.1 53.8 -
PE (x) 51.4 42.1 67.8 42.8 - 34.5 28.9 -
RoNW (%) 21.2 21.4 18.2 17.9 - 19.0 19.4 -
RoCE (%) 15.4 17.6 19.7 17.1 - 20.4 23.3 -
- - - - - - - - -
- - - - - - - - -
Source: Company, ICICI Direct Research

Key takeaways of recent quarter & conference call highlights

Q3FY23 Results: Steady quarterly performance

  • Revenues grew 18.3% YoY to | 2491 crore, mainly driven by high double-digit growth in India, US and Brazil markets. On the operational front, EBITDA increased 35.1% YoY to | 724 crore while EBITDA margins expanded 361 bps to 29.1% YoY. PAT increased 13.73% YoY to | 283 crore. Margins came in at 11.4%. The change in revenue mix, higher revenues across geographies helped such a performance during the quarter
  • Torrent’s numbers were in line with our estimates on the sales front but margins were impacted by a one-off in manufacturing overheads. Branded generics business India continues to perform well with focus on Curatio acquisition and synergising it with Torrent in terms of cost as well procurement. Brazil numbers were a beat on our estimates driven by generic brands and CNS franchise. US continues to witness price erosion in high single digit, growth is due to low base and currency tailwinds. In Germany, supplies for the tender have started but it continues to witness price erosion in high single digit. We remain positive on Torrent’s growth story and expecting some headwinds from acquisition of Curatio Healthcare


Q3FY23 Earnings Conference Call highlights:

Performance drivers:

  • Overall, the performance was led by robust growth from branded generic markets while steady performance was delivered by the generic markets
  • New launch momentum, top brand performance and portfolio integration from acquisitions were main drivers of growth in the branded generic markets
  • Improved price realisation acted as a tailwind during the quarter
  • The company is strengthening its share in diabetes segment

India business:

  • The performance of its leading brands, the success of its recent launches, particularly in the chronic market and the rapid expansion of the Curatio portfolio were the main drivers of growth
  • It has started realising synergies in terms of costs due to Curatio business

Brazil business:

  • Its CNS and generic business, which currently accounts for around 14% of Brazilian revenues, have made significant contributions to growth market
  • The share of its top two markets in prescriptions for December came in at 8% for Desvenlafaxine and 9% for Rivaroxaban

Germany business:

  • The commercialisation of some of the new tenders won earlier in the year, as well as four new launches in Q3 drove the performance
  • These new products helped the company compensate for the rising pricing pressures due to increased competition in the market

US business:

  • It received OAI classification for the Indrad facility
  • It plans to file about five to six products in the current fiscal year


  • Successfully launched six products in the last 12 months in Brazil markets whereas there were four new launches in Germany in Q3FY23
  • In Brazil, it also intends to increase its coverage of CNS in cardio markets from the current 19% to 35% by FY25
  • Currently, there are 10 products in Brazil, which are pending for approval with ANVISA. It plans to add 10 plus products before the end of this fiscal year



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