Visit http://indiaer.blogspot.com/ for complete details Torrent Pharma |
On Track; Maintain Buy |
BUY
CMP: Rs558 Target Price: Rs650
n Revenue growth is above our estimates on account of 22% increase in domestic formulations and higher than expected growth in the international business
n EBITDA margins declined (as estimated) on account of 468bps contraction in gross margins, higher employee cost and other expenses
n Higher than expected rise in depreciation and interest impacted PAT (Rs762mn vs. est. of Rs817mn)
n Maintain earnings and Buy rating with a target price of Rs650
Revenues at Rs5.8bn is above our estimate of Rs5.5bn
Torrent’s Q2FY11 revenue grew by 21% to Rs5.8bn, above our expectations of Rs5.5bn
(including other operating income). The higher that expected growth in the revenue was
on account of a) 22% growth in the domestic formulation business (Rs2.2bn vs. est. of
Rs2.1bn), b) 16% growth in the CRAMS segment (Rs565mn vs. est. of Rs527mn), and
c) 21% growth in exports (Rs2.8bn vs. est. of Rs2.7bn). The higher growth in domestic
formulation business was in spite of price reduction which the company took on some of
its products. In fact volume growth for the quarter was 20% (higher than previous
quarters); however, price cut has impacted 3% growth in value. The company is also
witnessing good revenue traction form new therapies. Export formulation business did
better than expected and grew by 21% to Rs2.84bn vs. est. of Rs2.72bn driven by a)
17% growth in Brazil market to Rs924mn, b) 51% growth in US to Rs328mn, c) 69%
growth in RoE to Rs388mn, d) 27% growth in Europe to Rs393mn, and e) 14% growth
in Russia/CIS to Rs129mn. Heumann revenue during the quarter grew by 17% to
Rs735mn driven by new supplies of tender products.
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