MOSL: TORRENT PHARMACEUTICALS (Neutral)-Margins expand-Improvement in US business remains key
Torrent Pharmaceuticals: Margins expand; Improvement in US business remains key
(TRP IN, Mkt Cap USD3.6b, CMP INR1372, TP INR1400, 2% Upside, Neutral)
- TRP reported sales of INR14.3b (+4.5% YoY; ~5% miss) in 3QFY18. The miss on revenue can be attributed to a decline in the US and Brazilian businesses. India business grew 22% YoY to INR6.1b (~23% growth adj. for GST). EBITDA increased 14% YoY to INR3.53b (est. of INR3.62b). Margin expanded ~195bp YoY (+130bp QoQ), primarily due to a favorable product mix toward higher-margin branded products. PAT declined 72% YoY to INR580m, mainly due to a one-time impact of the Unichem acquisition and the re-measurement of deferred tax on account of a change in the corporate tax in the US. Adjusted for the one-time impact, PAT came in at INR2.4b (est. of INR2.1b).
- India business continues to grow at robust pace; US remains a drag: US business stood at INR2.7b (-14% YoY). Key approvals for TRP got delayed in FY18 due to queries and plant-related issues. The company expects 10 approvals in FY19, which should help drive growth. India business grew ~17% YoY. Adjusted for Unichem sales, India business grew at 14% YoY. Unichem is the fifth acquisition in India by TRP in the last four years (others being brands from Elder and Novartis, and manufacturing plants from Zyg Pharma and Glochem). According to the IMS, TRP will be ranked 5th in terms of secondary sales in the Indian pharma market post this acquisition. Biopharm acquisition will get consolidated from Jan-18.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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