Shares of Torrent Pharmaceuticals Ltd surged about 9 per cent during the trading session on Monday to hit new 52-week highs after the company reported a strong set of performance in the quarter ended in March, 2024. However, the brokerage firms remained mostly neutral on the counter as the numbers were in line to the expectations.
Torrent Pharma reported a 57 per cent rise on a year-on-year (YoY) basis in its consolidated net profit for March quarter at Rs 449 crore from Rs 287 crore in the year-ago period. Its revenue from operations grew by 10 per cent YoY to Rs 2,745 crore, while Ebitda for quarter increased 21 per cent YoY to Rs 883 crore.
The board also recommended for issuance of equity shares including convertible bonds/debentures through qualified institutional placement (QIP) and or any other modes for an amount not exceeding Rs 5,000 crores. It also recommended to the members a final dividend of Rs 6 (120 per cent) per share.
Following the announcement of earnings, shares of Torrent Pharmaceuticals surged 8.70 per cent to Rs 2,839.90 on Monday, commanding a total market capitalization close to Rs 95,000 crore. The scrip had settled at Rs 2,612.05 in the previous trading session on Friday.
Torrent Pharma 4QFY24 performance was in line with our expectations led by strength across all markets, excluding US. Led by price hikes and continued operating leverage across branded and generic segments, we bake in a 220 basis points Ebitda margin expansion over FY2024-27E to 33.6 per cent, said Kotak Institutional Equities.
"While TRP mentioned that there is no M&A lined up over the near term, backed by strong FCF generation, we expect domestic acquisitions to always remain on Torrent Pharma anvil. At 34 times FY6E EPS, we believe the strong earnings momentum is well-captured, it added, maintaining a reduced rating with a revised fair value of Rs 2,575 on the stock.
Torrent Pharma's branded India formulations business grew by 10 per cent, driven by price increases, growth of top brands, new launches, and the consumer health portfolio. On the export front, Brazil formulations grew at a healthy rate of 11 per cent on YoY basis, driven by new launches and improved volumes in top brands, said Antique Stock Broking.
"With a strong growth outlook for the India and Brazil businesses coupled with growing German and US formulations, we expect Torrent Pharma's revenue to grow at a CAGR of 13 per cent over a two-year period. We also increase our Ebitda margin assumption to 35 per cent and EPS estimate by 10 per cent for FY26," it said with a 'buy' call and a revised target price of Rs 3,244.
The management of Torrent Pharma expects domestic business to grow 2-3ppt ahead of IPM driven by performance of top brands, higher field force productivity and consumer scale-up. A lot of this growth will be led by 7-8 per cent price hikes as volume growth remains soft, said JM Financial.
"TRP will launch 4-6 branded products in Brazil which will support mid-teens growth. The company has expanded its reach in Germany and has secured tenders to deliver high single digit growth next fiscal which will be visible from second quarter. Given the high valuations and pending recovery in the US business, we maintain 'hold' with a March 2025 target price of Rs 2,520," it said.
The subdued show in the US was offset by superior growth in Latin America and ROW markets. Torrent Pharma ended FY24 with 27 per cent YoY earnings growth, backed by better-than-industry growth in branded generics segment and 190 basis points margin expansion, said Motilal Oswal Finance Services.
"We maintain our estimates for FY25/FY26. We value Torrent Pharma at 32 times 12 months forward earnings to arrive at a TP of Rs 2,575. With field force expansion, new launches and market share gains in existing products, Torrent continues to exhibit superior growth in branded generics segment across domestic formulation (DF) and LATAM," it added with a 'neutral' tag.