Torrent Pharma - Q4FY13 Result Update - Sushil Finance

Torrent Pharma Ltd. (TPL) reported strong growth of 29.2% on the revenue front whereas its PAT came in at Rs.1110 mn (including several one-offs) in comparison to a loss in Q4FY12 (on the back of one time charge). For the full year, TPL recorded revenues of Rs.32120 mn registering a growth of 19.1%, with PAT growing to Rs.4330 mn, a growth of 52.4%. The following are the key highlights of the results which are summarized below:

Key Highlights of Q4FY13

Revenues grew by 29.2% YoY from Rs.6743 mn in Q4FY12 to Rs.8710 mn in Q4FY13 on the back of 34% growth from International operations specially US (44%), Europe including Heumann (60%) and ROW including CIS (22%) markets.

The domestic formulation business witnessed marginal growth of 9% YoY to Rs.2180 mn led by 15% YoY growth in chronic segment and 10% growth in acute segment, while contract manufacturing business growth was flat YoY due to lower insulin off-take by Novo-Nordisk.

EBITDA margins came in at 25.3% v/s 12.6% in Q4FY12 led by Rs.290 mn milestone income & Rs.230 mn of forex gain. EBIDTA margins stood at 19.9% adjusting for these one-offs.

TPL's Q4FY13 PAT came in at Rs.1110 mn v/s a loss of Rs.16.5 mn in Q4FY12 (on the back of one time charge of Rs. 654 mn). Excluding for a diminution in value of investment worth Rs.370 mn, the adjusted PAT came in at Rs.1480 mn for the quarter.

Key Highlights of FY13

Revenues for FY13 came in at Rs.32120 mn as against Rs.26959 mn in FY12, registering a growth of 19.1%. Export formulations witnessed a growth of 22% as against 12.6% growth in the domestic formulations space. On the CRAMS front, the company registered a flatish growth of 1.4% in FY13 coupled with an announcement of termination of its partnership with AstraZaneca which was expected to start garnering revenues from FY14E.

Operating profit reported a growth of 38.4% YoY from Rs.5007.0 mn in FY12 to Rs.6930 mn in FY13. Operating margin for FY13 came in at 21.6% in comparison to 18.6% in FY12. Net Profit grew by a strong 52.4% YoY from Rs.2841 mn to Rs.4330 mn in FY13 whereas margins stood at 13.5%.

OUTLOOK & VALUATION

With the company continuing to face headwinds in the domestic space specially the acute segment coupled with some sluggishness expected in the market in Q1FY14E on the back of implementation of NPPP 2013, we believe the company will take some time before it resorts back to strong double digit growth in the domestic space. However on the export front, we believe, TPL is well on course to register stellar performance backed by strong growth & higher profitability expected from the US business coupled with expected noticeable improvement in performance from other existing markets such as Europe, Brazil etc.

On the margin front, Q4FY13 recorded considerable improvement on account of higher dossier sales, forex gain & lower R&D expenses. With R&D expenses expected to increase to 5-6% of sales, we believe the FY13 EBIDTA margins are not sustainable going forward. However, on the revenue front we have upward revised our FY14 estimates marginally on the back of better visibility and also introduced FY15E numbers. We have thereby rolled forward our target based on FY15 estimates recommending a HOLD on the stock with a TP of Rs.891 (14x FY15E EPS of Rs.63.7).

Source : Equity Bulls

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