Torrent Pharmaceuticals' Q3FY18 results (Outperformer) - In line quarter; Interesting times ahead
Q3FY18 result highlights
- Rev stood at Rs14.8bn (+2%/3% yoy/qoq) marginally lower vs est Rs15bn. India came significantly ahead at Rs5.9bn (+17%; like to like 22%) vs est of 12% growth. US reported higher sales at Rs2.67bn (+4% qoq; est Rs2.4bn). Brazil came at Rs1.9bn (+22% yoy; est Rs1.8b). CRAMS came sharply low at 590m (-35% qoq) due to plant shut down.
- EBITDA came in higher at Rs3.6bn (+14% qoq) vs est of Rs3.4bn. OPM of 24.3% vs est of 23%. GMs improved at 74.9% (+550bps/260bps yoy/qoq) ahead of our est of 71% aided by product mix. Other exp stood higher at Rs4.5bn (+14% qoq) vs est of Rs4.4bn.
- Tax rate stood higher for the quarter at 78% vs est of 22% led by multiple one off amounting to Rs1.85bn. Consequently reported PAT stood lower at Rs790mn vs est of Rs2.12bn
- Torrent consolidated Unichem for ~10 days during the quarter.
Key positives: Higher India and Brazil rev; higher GMs
Key negatives: Higher tax rate
Impact on financials: We have reduced our FY18E earnings estimates to account for the consolidation of Unichem acquisition in Q4FY18. Maintained our FY19E/20E estimates.
Valuations & view
TPL is one of the most competitive mid-sized pharma company in India, with Rs56bn branded formulation sales (FY20E) across India, Brazil and EMs and a growing US generics business. The company’s focus on profitability adds to its competitiveness. Torrent’s Rs36bn bet on Unichem, followed by buyout of Bio-Pharma Inc. (a niche US generic business) - amid challenging times for the Indian pharma industry - signals optimism on its long term outlook for the business. Torrent expects profitability from its Unichem portfolio (20-22% currently) to expand sharply and align with Torrent’s profitability (>40%) over next 2-3 years. Profitability in the domestic business combined with broad-based improvement in exports should drive 33%/45% EBITDA/PAT CAGR with strong free cash generation over FY18-20E, in our view. Maintain Outperformer with a 12 month price target price of Rs1,657; Torrent is among our preferred mid-cap picks.
Torrent Pharmaceuticals is a pharmaceutical company based in India. Co. is engaged in the manufacture, sale and export of pharmaceuticals in the form of tablets, capsules, liquid, injections, vials, ointments, and bulk drugs. Co. is predominately active in the therapeutic areas of cardiovascular (CV) and central nervous system (CNS) and maintains a significant presence in gastro-intestinal, diabetology, anti-infective and pain management segments. Co.'s primary products include Insulin, Domperidone HCI, and Alprazolam. In addition, Co. is also engaged in the manufacture of medical equipment such as computerized tread mills and medical electronic equipment.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.