Torrent Pharmaceuticals falls 3% after in-line Q2 results; Brokerages mixed

Shares of Torrent Pharmaceuticals in early trade on Wednesday (October 25) slipped by as much as 2.74 per cent after the mid-cap company posted in-line Q2 results. The stock opened the session on a positive note gaining as much as 2 per cent at the opening, only to pare its gains later.

Profit after tax at the drug major grew 24 per cent year-on-year (YoY) to Rs 386 crore in the September ended quarter. The figure stood at Rs 312 crore in the corresponding quarter of the fiscal year 2023.

Revenue at the company registered 16 per cent YoY growth to Rs 2660 crore in the Q2 period as against Rs 2291 crore in the same period last year. Operating EBITDA during the period came in at Rs 825 crore, up 22 per cent YoY. In the Q2 period of the previous fiscal, operation profitability was at Rs 679 crore.

The company’s India revenue registered 18 per cent growth at Rs 1,444 crores. Market outperformance was led by continued double digit growth in chronic therapies, revival in gastro demand, traction in consumer division, and new launches.  

Brokerages give a mixed view on Torrent Pharma 

Motilal Oswal maintains a neutral rating on the stock with a target price of Rs 2050 as it sees limited upside potential from the current levels. The drug company continues its outperformance in domestic formulation (DF) as well as the Brazil market. This was, however, partially offset by subdued show in US generics, the brokerage added. Furthermore, higher operational expenditure continued to offset the benefit from the company’s product mix.

Global brokerage Jefferies has maintained its hold rating on the counter with a raised target price of Rs 2040. The brokerage said the company posted in-line revenue and EBITDA. Besides, India’s revenue grew 18 per cent YoY while Brazil sales bounced back strongly. Jefferies sees the branded market to remain the key focus area and capital allocation to be disciplined going forward.

Goldman Sachs is bullish on the counter and has maintained a buy rating with a raised target of Rs 2325, implying potential gains of over 24 per cent from the previous close. The brokerage is of the view that the pharma company’s strong growth in core markets drove the profitability beat in the Q2 period. EBITDA margin at 31 per cent higher than the street estimates, was led by improvement in GMs. For the overall business, the global brokerage forecasts a 20 per cent + EBITDA CAGR over FY23-26E.