Reiterate 'BUY' on Torrent Pharmaceuticals – TP Rs.740 - Geojit BNP Paribas

- Torrent Pharma's Q2FY13 results were broadly in line, as its India formulations business, which accounts for 40% of sales, reported 15% growth in revenues, marginally ahead of estimates.

- The company witnessed strong growth in both the Acute and Chronic segments of the domestic business.

- Although India business grew in the single digits for most of last fiscal year, over the last two quarters, it has been able to record double digit growth due to better execution, which is encouraging.

- US growth in constant USD was 25% while Brazil sales declined 7%, YoY, as the Brazilian drug regulator went on a two month strike in Q2, which affected clearance of goods from ports.

- The outlook for Brazil (20% of sales) appears hazy as growth could be impacted by fewer new launches and a slowing addressable market. Brazil market growth slowed QoQ, and there is increasing competition from local players.

- Even after factoring in slower sales growth for Brazil, the TP has been increased to Rs.740 (from Rs.733 earlier) over a period of one year.

- Key risks to target price: Continued regulatory issues in Brazil, Forex Losses

Source : Equity Bulls

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