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Nirmal Bang Report
Torrent Pharmaceuticals Ltd.'s Q3 FY24 results were largely in line with our estimate as well as consensus estimates, led by strong growth across major branded generic markets coupled with margin improvement aided by a better product mix and cost optimisation initiatives.
The strong performance was driven by robust growth in India aided by the Curatio acquisition and new launches, while the Brazilian business continued to outperform the market. Germany business growth was led by the revival of the tender business.
However, the U.S. generic business reported a decline due to pricing pressure and the lack of new launches.
We are positive about Torrent Pharma mainly due to its strong Chronic-centric branded portfolio, industry-leading per contract per month in India and healthy margins and free cash flow, but the current valuations remain concerning hence we take a conservative approach.
We downgrade from 'Buy' to 'Accumulate' with a target price of Rs 2,443, valuing it at 19 times December 25E enterprise value/Ebitda.
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