Torrent Pharma Rallies 8% After Q4 Results; Should you Buy, Sell or Hold?

Torrent Pharma rallied 8 per cent after the company reported consolidated net profit of Rs 287 crore in Q4.

The company on Tuesday reported a consolidated profit after tax (PAT) of Rs 287 crore for the fourth quarter ended March 2023, riding on robust sales across geographies. The drug maker had reported a net loss of Rs 118 crore in the January-March quarter of the 2021-22 fiscal.

The company’s revenue rose to Rs 2,491 crore for the fourth quarter as compared to Rs 2,131 crore in the year-ago period. The board has also approved a final dividend of Rs 8 per share of Rs 5 each.

Should you Buy, Sell or Hold?

Brokerage firms have diverse views on the prospects of the stock. While some of them see a significant upside in the stock some believe the current valuation of the stock has limited upside.

Brokerage firm Nirmal Bang maintained a buy call on the stock with a target price of Rs 1,981, valuing the stock at 18 times FY25E EV/EBITDA.

“Torrent reported strong revenue growth in Q4FY23, beating our estimates, largely led by continued strong growth in branded generics markets and integration of the recently acquired Curatio portfolio while adjusted margin was in line with our expectation,” said Nirmal Bang.

“We are positive about Torrent Pharma mainly due to its strong chronic-centric branded portfolio, industry-leading PCPM (per capita per month) in India and healthy margins and FCF (free cash flow), which continue to provide opportunities for further inorganic growth,” said the brokerage firm.

Kotak maintained a ‘reduce’ rating on Torrent Pharma stock with a target price of Rs 1,645.

“India and Brazil in fine fettle. TRP reported an operationally in-line 4QFY23, even as lower other income and higher finance costs drove a 12% PAT miss,” it said.

“Branded markets remain the mainstay for TRP and continue to drive overall performance, with more than 70% sales contribution and much higher EBITDA contribution,” it added.

Motilal Oswal trimmed its FY24/FY25 EPS estimates by 4%/1% to factor in 1) incremental expenses for the consumer healthcare platform, 2) a gradual revival in US sales, and 3) improved growth momentum in the LATAM business.

“We value TRP at 26x 12M forward earnings to arrive at a target price of Rs 1,650,” it said.

Brokerage firm Kotak Institutional Equities also maintained a ‘reduce’ call on the stock with a target price of ₹1,645, citing the stock is trading at an elevated nearly 38 times FY2024E EPS.

The brokerage firm said even as it expects India and Brazil to continue their strong growth trajectory, an uncertain US outlook amid a mediocre US pipeline and variability on traction from new tenders in Germany remain concerns.

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