Retain 'buy' on Torrent Pharma - TP Rs.800 - Geojit BNP Paribas Financial Services

- 3QFY13 was a mixed one. While growth in India at 14% yoy and 44% yoy growth in the US were steady, Brazil reported a modest 4% growth in constant currency, due to slowing addressable market growth.

- Operating margins excluding licensing income were marginally below estimate while PAT at Rs.110 crore is in line with estimates.

- Growth in Brazil was muted for the second consecutive quarter. While 2Q growth was impacted by the ANVISA (drug regulator) strike, 3Q was impacted by the slower growth in addressable market and the company's unwillingness to participate in low margin government run medical program.

- New launches / pick up in the addressable market is the key to improve performance.

- At the target price of Rs.800, the stock would trade at 12.5 P/E of one year forward earnings.

- With Brazil likely to remain weak in the near term, steady performance in India and the US would be key to sustaining current valuation.

- Risks to the target price and the outlook are severe changes to the currently proposed drug policy and further slowdown in Brazil.

Source : Equity Bulls

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