Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Exports led growth
Torrent Pharma’s numbers were ahead of estimates primarily on account
of higher than expected sales growth and lower tax rate. While domestic
sales growth was weak, exports primarily to Brazil, US and EU were very
strong partly because of benefit from currency in Brazil and Germany. We
continue to see strong operating growth over coming quarters with
potential benefits from currency.
Exports led sales growth
Domestic formulations growth was lower than expectations at 8.4% YoY led
by pressures in acute portfolio while the company guides for growth to pick
up to 15% in 2HFY12. Contract manufacturing growth was weak after a very
strong 1Q due to inventory adjustment. Exports growth was stronger
especially Brazil, Germany and the US partly aided by favourable currency.
Growth in Brazil was higher than usual rate due to resolution of trouble with a
major distributor that impacted Torrent’s Brazilian business in mid 2011.
Operating profit growth to remain strong
Torrent’s Ebitda margins for the quarter were up YoY in line with expectations.
The company guides for FY12 margins to be slightly better than in FY11
despite commissioning of new facility for domestic formulations at Sikkim that
leads to higher upfront costs. We build 100bps Ebitda margin expansion both
in FY12 and FY13 and expect Ebitda growth at 26% cagr over FY11-13.
Additionally, we expect favourable currency to provide benefit at margin level.
Increasing in debtors impact operating cash flows
Torrent’s working capital requirement increased in 1HFY12 partly due to
currency and partly due to increasing in exports. The company expects
marginal increase in working capital requirements as proportion of exports in
total sales continue to increase. Torrent’s balance sheet is net cash including
investments that are largely in mutual funds. The company has optimised tax
out go by differential transfer pricing for subsidiaries.
Valuations attractive, maintain BUY
With substantial investments in domestic and other branded markets, we
expect Torrent Pharma’s net profits to grow 21% and see strong cash flows in
FY12-13. At 12x FY13, valuations are at discount to larger pharmaceutical
names. With reasonably strong core earnings growth, we expect the stock to
deliver strong return from current levels. Tax benefits from Sikkim plant will
help in reduction in tax rate to 18% for FY12 and even lower in FY13.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Exports led growth
Torrent Pharma’s numbers were ahead of estimates primarily on account
of higher than expected sales growth and lower tax rate. While domestic
sales growth was weak, exports primarily to Brazil, US and EU were very
strong partly because of benefit from currency in Brazil and Germany. We
continue to see strong operating growth over coming quarters with
potential benefits from currency.
Exports led sales growth
Domestic formulations growth was lower than expectations at 8.4% YoY led
by pressures in acute portfolio while the company guides for growth to pick
up to 15% in 2HFY12. Contract manufacturing growth was weak after a very
strong 1Q due to inventory adjustment. Exports growth was stronger
especially Brazil, Germany and the US partly aided by favourable currency.
Growth in Brazil was higher than usual rate due to resolution of trouble with a
major distributor that impacted Torrent’s Brazilian business in mid 2011.
Operating profit growth to remain strong
Torrent’s Ebitda margins for the quarter were up YoY in line with expectations.
The company guides for FY12 margins to be slightly better than in FY11
despite commissioning of new facility for domestic formulations at Sikkim that
leads to higher upfront costs. We build 100bps Ebitda margin expansion both
in FY12 and FY13 and expect Ebitda growth at 26% cagr over FY11-13.
Additionally, we expect favourable currency to provide benefit at margin level.
Increasing in debtors impact operating cash flows
Torrent’s working capital requirement increased in 1HFY12 partly due to
currency and partly due to increasing in exports. The company expects
marginal increase in working capital requirements as proportion of exports in
total sales continue to increase. Torrent’s balance sheet is net cash including
investments that are largely in mutual funds. The company has optimised tax
out go by differential transfer pricing for subsidiaries.
Valuations attractive, maintain BUY
With substantial investments in domestic and other branded markets, we
expect Torrent Pharma’s net profits to grow 21% and see strong cash flows in
FY12-13. At 12x FY13, valuations are at discount to larger pharmaceutical
names. With reasonably strong core earnings growth, we expect the stock to
deliver strong return from current levels. Tax benefits from Sikkim plant will
help in reduction in tax rate to 18% for FY12 and even lower in FY13.
No comments:
Post a Comment