Torrent Pharmaceuticals Ltd.'s Q3FY24 results were largely in line with our estimate as well as consensus estimates, led by strong growth in major branded generic markets along with margin improvement aided by better product mix and cost optimization initiatives.
The strong performance was driven by strong growth in India helped by the acquisition of Curatio and new launches, while the Brazilian business continued to outperform the market. Business growth in Germany was led by the revival of the tendering business.
However, the generics business in the United States reported a decline due to pricing pressure and a lack of new launches.
We are positive about Torrent Pharma primarily due to its strong portfolio of brands focused on chronic diseases, leading the industry on a monthly contract basis. in India and healthy margins and free cash flow, but current valuations remain concerning, so we take a conservative approach.
We downgraded from 'Buy' to 'Store' with a target price of Rs 2,443, valuing it at 19 times December 25E enterprise value/Ebitda.
