Actions of Torrent Pharmaceutical Ltd. on Thursday it settled 3.75 percent lower at Rs 1,775.15, stopping its five-day winning streak. The stock witnessed a strong upward move in the previous session and hit a one-year high of Rs 1,886.25 (intraday) after posting strong results in the fourth quarter (Q4 FY23). Two national brokerages have assigned their respective 'Buy' ratings on the counter with a one-year price target of up to Rs 1,995.
AnandRathi said: "Driven by healthy growth in its branded generics business for India, Brazil and the rest of the world (up 23%), Torrent's fourth-quarter revenue grew 17%, year-over-year ( YoY), at Rs 2,490 crore EBITDA Margin was flat, QoQ (QoT) at 29.20% Higher finance costs and lower other income caused PAT (profit after tax) fell 11% yoy to Rs 290 crore. We maintain our 'Buy' rating on the stock, at a higher 12-month price target of Rs 1995, 19x FY25e EV/EBITDA."
Strong growth in domestic chronic therapies, launches and price increases in India, Brazil and the rest of the world would drive profit growth of 24% in FY23-25, it added.
On the other hand, the brokerage cited prices in the national portfolio, currency fluctuations and regulatory problems at the plants as risks.
Prabhudas Lilladher said, "Q4 FY23 EBITDA was largely in line, however PAT was below our estimate due to higher taxes and a one-time inventory write-off. Torrent is worth Rs 7,000 crore (75 percent of total sales) of Profitable sales of branded formulas were distributed across the India, Brazil and rest of the world markets In the short term, the acquisition of Curatio will increase the company's net debt and we consider that this acquisition will dilute earnings per share Also, historically the company has successfully integrated the acquisition of Unichem and Elder which gives us peace of mind Maintain 'Buy' rating with revised target price of Rs 1,900 per share ( Rs 1,820 before), 17x EV/EBITDA through FY25E".
The pharmaceutical company's core business grew 15 percent and it expects the India business to continue its current growth momentum supported by new launches and the integration of Curatio, Prabhudas said.
In the technical setup, the counter looked largely 'overbought'.
AR Ramachandran of Tips2trades said: โTorrent Pharma is bullish but also overbought on the daily charts with next resistance at Rs 1,909. Investors should book profits at current levels and a close below daily support at Rs 1,733 could lead to a target of Rs 1,515 in the short term".
VLA Ambala, Research Analyst at Stock Market Today, said: "The main support for the stock is at Rs 1440 and the expected target is a short to medium term between Rs 1900 and Rs 2100. Currently, it looked overbought. So, it is better to wait for prices to drop a bit before starting new long positions."
Meanwhile, Indian equity benchmarks closed in the red today, dragged down by banks and financials.
