MOSL: TORRENT PHARMA (Neutral)-Strong CAPA required to overcome issues raised in recent 483s
TORRENT PHARMA: Strong CAPA required to overcome issues raised in recent 483s
(TRP IN, Mkt Cap USD4.3b, CMP INR1755, TP INR1660, 5% Downside, Neutral)
- We reviewed the recent 483s issued to Torrent Pharma (TRP) for its Indrad and Dahej sites during the Mar-Apr'19 USFDA inspections.
- The observation related to the out-of-specification (OOS) investigation has been highlighted in both 483s. Notably, there has been a mention of 'repeat observation' in the Dahej 483.
- We believe that TRP will likely respond with strong corrective and preventive action (CAPA) on these observations in order to remain compliant. This is particularly because these facilities contribute majorly to its US sales (~USD208m or 19% of total sales on a 12-month trailing basis).
- While TRP is estimated to deliver reasonably good CAGR of 14% in sales and 16% in EBITDA over FY19-21, the recent regulatory actions have raised some concerns about its US business. We, thus, await product approvals and/or successful compliance for the ongoing base business before turning more positive on the stock. Also, given the limited upside from the current levels, we maintain our Neutral stance on the stock.
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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