TORRENT PHARMA BRANDED BUSINESS DRIVING GROWTH

News: Revenues grew 10% YoY to | 2131 crore. Domestic formulations grew 12% YoY to | 1034 crore aided by new launch momentum, robust performance of top brands and continued market outperformance across focus therapies, while 33% YoY growth to | 251 crore in Brazil was witnessed on account of performance of top brands and new launches. US business grew 5% YoY to | 282 crore mainly on back of launch of Dapsone during the quarter. Growth was partially offset by 18% YoY decline in Germany to | 218 crore as business was adversely impacted by loss of products in a recent tender. EBITDA margins declined 372 bps YoY to 26.3%, in-line with I-direct estimate of 26.2%. EBITDA de-grew 4% YoY to | 561 crore. Subsequently, adjusted profit improved 67% YoY to | 540 crore. [Note: Profit is adjusted for one-time loss for impairment provision for discontinuation of liquids business in the US for | 485 crore]. The Board of Directors recommended a final dividend of | 8 per equity share and a special dividend of | 15 per equity share, taking the total dividend to | 48 per equity share in FY22 (including interim dividend of | 25 per equity share). Additionally, Board also recommended Bonus share issue in the ratio of 1:1 i.e. one equity bonus share for each fully paid up equity share

Views: Torrent Pharma’s Q4FY22 revenues was marginally better than I-direct estimates while margin profile was in line with our expectations. Torrent’s e branded businesses contributed to 70% of total revenues in Q4 and grew 15% with India and Brazil continuing on a strong footing. The US business registered sequential growth aided mainly by launch of a new product while company continues to face prolonged delays in re-inspection of US facilities on account of the pandemic, coupled with higher than anticipated pricing pressure in US business. The management has initiated cost optimisation measures, which should help get back on track with respect to margins in the upcoming quarters. The company’s portfolio is finely balanced between India, Brazil, Germany and the US with India being the leader. With consistent FCF generation and moderation in core capex, we expect the leverage situation to improve substantially

Impact: Positive