Q3FY21 Result Update - Torrent Pharmaceuticals - ICICI Direct

Q3 revenues remained flattish (up 1.5% YoY) at Rs. 1995 crore (I-direct estimate: Rs. 2072 crore) mainly due to 23.4% YoY decline in US formulations to Rs. 292 crore. Domestic sales grew 6.8% YoY to Rs. 930 crore. Brazil de-grew 8.5% YoY to Rs. 173 crore. Germany business grew a robust 21.0% YoY to Rs. 265 crore. EBITDA margins expanded 296 bps YoY to 30.4% (I-direct estimate: 30.5%) mainly due to lower other expenses amid lower travel and promotional spends. Subsequently, EBITDA grew 12.4% YoY to Rs. 607 crore (I-direct estimate: Rs. 632 crore). PAT grew 18.3% YoY to Rs. 297 crore (I-direct estimate: Rs. 289 crore) in line with operational performance.

Valuation & Outlook

Q3 results were mostly in line with I-direct estimates (albeit skewed) on all fronts. While growth in India and Germany was mostly offset by decline in the US and Brazil, overall profitability was higher YoY amid lower on-ground activities and a lower tax rate. Overhang pertaining to two US focused plants notwithstanding, Torrent continues to impress thanks to its robust margin profile that can be attributed to global portfolio that comprises ~65% branded generics. We expect a further improvement in this matrix, product rationalisation to further strengthen margins. The company's portfolio is finely balanced between India, Brazil, Germany and the US with India being the leader. With consistent FCF generation, moderation in core capex, we expect the leverage situation to improve substantially. With these key characteristics we believe the premium valuation is justified. We maintain BUY with a TP of Rs. 3290 (earlier Rs. 3135) based on 32x FY23E EPS of Rs. 102.8.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TorrentPharma_Q3FY21.pdf

Shares of TORRENT PHARMACEUTICALS LTD. was last trading in BSE at Rs.2602.4 as compared to the previous close of Rs. 2609.75. The total number of shares traded during the day was 21875 in over 1733 trades.

The stock hit an intraday high of Rs. 2632 and intraday low of 2595.8. The net turnover during the day was Rs. 57156833.

Source : Equity Bulls

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