2026-03-16 22:47:06
Latest Post
The Leela Palaces Hotels and Resorts Acquires Ultra-Luxury Resort In Coorg, Karnataka
Oberoi Realty Ltd enters into development agreement with MHADA
AVI Polymers Launches AVI Waste Management Private Limited to Develop AI-Based Carbon Credit and Sustainability Systems for SMEs and Startups
Cupid Breweries and Distilleries Ltd inks agreement with Bansal Udyog Pvt Ltd for West Bengal foray
Bajaj Electricals acquires Morphy Richards Brand Rights in India and Neighbouring Markets for ₹141.4 Crores
Research
Torrent Pharma - Q2FY14 Update - Rating Change to Hold, Increased Target of Rs.509 - Sushil Finance
Posted On : 2013-11-09 02:22:08( TIMEZONE : IST )
Torrent Pharma Ltd. (TPL) reported strong set of numbers for Q2FY14 registering a YoY revenue growth of 25.1% majorly supported by 31.5% increase in international business , strong traction in the CRAMS space & a 9.6% growth in the domestic market. However on the bottom line front TPL's net profit grew 5% YoY to due to subdued EBITDA and higher taxation. The following are the key highlights of the results which are summarized below:
Key Highlights of Q2FY14
- Total Income grew by 25.1% YoY from Rs.7770 mn in Q2FY13 to Rs.9720 mn in Q2FY14. The company's domestic business which contributes ~31% to the sales of the company registered a growth of 9.6% whereas the export business registered a strong growth of 31.5%. CRAMS business also registered a strong growth of 49.3%.
- Domestic branded formulations registered a growth of 9.6% from Rs.2710 mn in Q2FY13 to Rs.2970 mn in Q2FY14. Q2FY14 was impacted mainly due to disruption in Trade (distributors not willing to take inventory due to reduction in trade margins) because of NLEM.
- Export formulations increased to Rs.5720 mn in Q2FY14 from Rs.4350 mn in Q2FY13 mainly on the back of a 23.7% growth in the US market led by volume increase in existing products coupled with favorable currency, 54.6% growth in Europe including Heumann (higher growth in the tender business and the dossier business) and 31.1% growth in ROW markets including CIS. Contract manufacturing reported also a strong growth of 49.3%. Latam registered a growth of 7.8% on the back of lower growth due to price erosion in a couple of products and delays in approval of new products.
- Operating profit reported a growth of 15.2% YoY from Rs.1553 mn in Q2FY13 to Rs.1790 mn in Q2FY14; whereas the EBIDTA margin came in at 18.4% vs 20% in Q2FY13 due to (1) forex loss of Rs.360 mn vs Rs.140 mn in Q2FY13, (2) provision made of Rs.70 mn for slow moving inventory, (3) presence of Rs.110 mn licensing income in Q2FY13, (4) price reductions in Brazil & product mix change in RoW markets. Excluding forex loss, provision of Rs.70 mn & one time milestone payment, EBITDA margins were at 22.8% vs 23.2% in Q2FY13.
- Reported Net Profit grew by 5.4% YoY from Rs. 1072 mn in Q2FY13 to Rs.1130 mn in Q2FY14 whereas margins were at 11.6%. EPS for the quarter came in at Rs.6.7 vs Rs.6.3 in Q2FY13.
OUTLOOK & VALUATION
Q2FY14 saw TPL improve its overall revenues by 25% YoY with strong growth in the EU and the US markets (sustainable going forward) whereas Brazil and Indian markets (trade related issues) were disappointments. However, with the management confident of seeing volume increase and better growth traction in Brazil coupled with recovery in the domestic formulations business beginning H2FY14E, driven by new product launches and improved productivity, we believe, improved execution will merit valuation re-rating for the stock. We believe, the current valuations do not reflect the improvement in business operations and thereby feel the valuation gap of TPL vis-Ã -vis mid-cap Pharma companies should reduce, going forward. We thereby recommend a HOLD on the stock with a target price of Rs.509 based on 16x FY15E EPS of Rs.31.8 without changing our estimates.
