MOSL: TORRENT PHARMACEUTICALS (Neutral)-Margins impacted by one-off sequentially
Torrent Pharmaceuticals: Margins impacted by one-off sequentially; Unichem integration to drive growth
(TRP IN, Mkt Cap USD3.6b, CMP INR1334, TP INR1350, 1% Upside, Neutral)
- TRP’s sales grew ~25% YoY to INR17.2b (est. of INR17.4) in 4QFY18. India business grew 48.4% YoY to INR6.9b (adj. for GST, growth was ~54%), including the acquisition of Unichem. EBITDA rose 23% YoY to INR3.6b (est. of INR4.1b), with the margin at 21.1% (-20bp YoY, - 310bp QoQ). The QoQ contraction in the margin is mainly due to one-time expense of INR500m, adjusted for which the margin stood at ~24%. Adj. PAT rose ~21% YoY to INR2.8b. In 4QFY18, TRP benefited from deferred tax of INR1.4b. For FY18, sales, EBITDA and adj. PAT stood at INR60b (+2.5%), INR13.5b (-2%) and INR9.1b (-3%), respectively.
- Early integration of Unichem to boost domestic business: US business grew 9% YoY to INR3.1b. Although TRP witnessed price erosion, the impact was offset by higher volumes. Going forward, the company expects healthy growth in US business on the back of new product launches. Growth in domestic business ex-Unichem was ~11% YoY (growth adj. for GST was 17%). Some of Unichem’s non-performing top products (such as Losar, Unienzyme and Ampoxin) have started showing an improvement. TRP expects integration of Unichem by end-FY19, which will help expedite synergies benefits. TRP expects Brazil business to improve from FY19 on the back of new product launches.
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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