Shares of Torrent Pharmaceuticals Ltd rose 3% in trading on Wednesday (Oct 25) after the multinational pharmaceutical company delivered in-line financial performance in the September quarter (Q2FY24). The pharmaceutical company's business in India was impressive, Brazil grew by double digits. This was partially offset by the moderate performance of American generics.
| Brokerages | Classification | T.P. |
| nomura | Buy | 2156 rupees |
| HSBC | Buy | 2200 rupees |
| Jefferies | Hold | 2,040 rupees |
| G.S. | Buy | 2325 INR |
| nuvma | Buy | Rs 2,410 |
| Motilal Oswal | Buy | 2,050 rupees |
"Torrent Pharma remains on track to achieve superior execution in the branded generic market (DF and Brazil). It is further expanding additional levers of growth (generic trade and consumer healthcare) in India," Motilal said in a note.
Taking into account these factors, the brokerage expects 14%, 19% and 34% compounded sales, EBITDA and profit after tax during FY23-25 โโto Rs 12.4 billion. $4,000 million rupees, $2,200 crore respectively.
"We maintain our Neutral rating due to limited upside potential from current levels," Motilal said with a price target of $2,050 per share.
The brokerage has lowered its FY24 earnings estimate by 4% to factor in higher interest cost and moderation in the US generics business. However, it has maintained its earnings estimates for FY25.
"We welcome management's initiatives to continually optimize the cost structure, as evidenced by giving up the low-margin US business. Price erosion in the US appears to be stabilizing and with tenders won in the EU, these businesses are unlikely to be a drag on Torrent Pharma," Nuvama said.
HSBC, for its part, is optimistic about Torrent Pharma's structurally sound business profile. The global brokerage has reiterated its positive stance on the pharmaceutical company, maintaining its 'Buy' rating on the stock, with a target of $2,200.
Goldman Sachs has attributed strong growth in the drugmaker's core markets to its improved profitability. Keeping its positive long-term outlook intact, GS has a "buy" call on the counter with a target of $2,325.
According to Nomura, Torrent Pharma's second-quarter earnings came in slightly below estimates, but India's strong growth remained a positive. The brokerage said the company's profits were affected by higher costs and lower revenues in the United States.
Torrent Pharma shares were trading 2.39% higher in $1,922.20 each on the NSE today. The bond has gained 24% since the beginning of this year.
First published: October 25, 2023 11:57 am IS
