MOSL: TORRENT PHARMACEUTICALS (Neutral)-Characterized by sustained DF traction, robust US biz growth
Torrent Pharmaceuticals: Characterized by sustained DF traction, robust US biz growth
(TRP IN, Mkt Cap USD4.4b, CMP INR1852, TP INR1660, 10% Downside, Neutral)
- In-line performance: Revenue grew 35% YoY to INR19.9b (our estimate: INR20.1b) in 3QFY19, largely driven by the addition of Unichem’s portfolio and robust growth in the US business. Gross margin shrank ~270bp YoY (-30bp QoQ) to 70.2% due to a change in the product mix. However, EBITDA margin expanded ~220bp YoY to 26.5%, driven by lower other expense (-500bp YoY as % of sales). Absolute EBITDA grew ~47% YoY to INR5.3b (in-line), largely led by strong revenue growth. Other income declined to INR30m from INR740m in 3QFY18. Reported PAT stood at INR2.5b (our estimate: INR2.1b). There was one-time income of INR630m related to patent settlement and expense of INR280m related to litigation cost. Adjusting for this, PAT declined ~10% YoY to INR2.2b (our estimate: INR2b). For 9MFY19, sales stood at INR57.5b (+34% YoY), EBITDA at INR14.8b (+50% YoY) and PAT at INR5.9b (-7% YoY).
- DF/US business drive revenue growth: DF business (41% of sales) grew 43% YoY to INR8.4b, led by better traction in the base portfolio and the addition of Unichem products. US base business (20% of sales) grew ~42% YoY, led by improved sales of new launches, increased market share in existing molecules and higher demand for the generic versions of a few products. Germany business (13% of sales) grew by 14% YoY. Brazil business (~8% of sales) de-grew by ~13% YoY, mainly due to a slowdown in the economy, but TRP expects the performance to pick up in 4Q.
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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