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E x p o r t s r o b u s t , d o m e s t i c b u s i n e s s s t i l l l a g s …
Torrent Pharma reported a mixed set of numbers for Q3FY12. While it
recorded revenue growth of ~21% YoY (I-direct estimate of 17.3%), the
EBIDITA margins were compressed at 17.4% vis-à-vis 20% in the
corresponding quarter last fiscal and against I-direct estimate of ~20%.
The pressure on margins was on account of higher operating expenses.
As a result, the EBIDTA and PAT growth was restricted to 6% and 8%,
respectively. The topline growth was fuelled by exports whereas
domestic formulations continued to languish at around 8-9% growth rate.
We maintain our BUY rating on the stock although sluggish domestic
growth is emerging as a matter of concern.
ƒ Exports continue to register robust growth
Exports grew by 33% to | 394 crore YoY on the back of strong
growth in the core Brazilian market (27% growth), the US (67%
growth) and Europe ex-Germany/RoW (37% growth). Germany
based Heumann grew 14% during the quarter. Growth was driven
by favourable currency impact and new launches.
ƒ Domestic business growth remains sluggish, CRAMS growth flat
Domestic formulations grew just 8% to | 229 crore, marking the
fourth consecutive quarter of sluggish growth. This is attributable to
~4% growth in acute therapies. CRAMS growth also remained flat
at 3%. Torrent recorded a licensing income of | 9.8 crore during the
quarter.
V a l u a t i o n
We expect Torrent’s sales, EBIDTA and PAT to grow at a CAGR of 17.4%,
24.9% and 22.2%, respectively, between FY11 and FY13E. What bothers
us is the slowdown in domestic formulations for such a long span despite
a major presence in the fast growing chronic therapies. We have altered
our FY13E growth estimates for domestic formulations from ~16-18% to
12-14% due to lack of management clarity. We have ascribed a target
price of | 620 (earlier | 678), based on 13x FY13E of | 47.7.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
E x p o r t s r o b u s t , d o m e s t i c b u s i n e s s s t i l l l a g s …
Torrent Pharma reported a mixed set of numbers for Q3FY12. While it
recorded revenue growth of ~21% YoY (I-direct estimate of 17.3%), the
EBIDITA margins were compressed at 17.4% vis-à-vis 20% in the
corresponding quarter last fiscal and against I-direct estimate of ~20%.
The pressure on margins was on account of higher operating expenses.
As a result, the EBIDTA and PAT growth was restricted to 6% and 8%,
respectively. The topline growth was fuelled by exports whereas
domestic formulations continued to languish at around 8-9% growth rate.
We maintain our BUY rating on the stock although sluggish domestic
growth is emerging as a matter of concern.
ƒ Exports continue to register robust growth
Exports grew by 33% to | 394 crore YoY on the back of strong
growth in the core Brazilian market (27% growth), the US (67%
growth) and Europe ex-Germany/RoW (37% growth). Germany
based Heumann grew 14% during the quarter. Growth was driven
by favourable currency impact and new launches.
ƒ Domestic business growth remains sluggish, CRAMS growth flat
Domestic formulations grew just 8% to | 229 crore, marking the
fourth consecutive quarter of sluggish growth. This is attributable to
~4% growth in acute therapies. CRAMS growth also remained flat
at 3%. Torrent recorded a licensing income of | 9.8 crore during the
quarter.
V a l u a t i o n
We expect Torrent’s sales, EBIDTA and PAT to grow at a CAGR of 17.4%,
24.9% and 22.2%, respectively, between FY11 and FY13E. What bothers
us is the slowdown in domestic formulations for such a long span despite
a major presence in the fast growing chronic therapies. We have altered
our FY13E growth estimates for domestic formulations from ~16-18% to
12-14% due to lack of management clarity. We have ascribed a target
price of | 620 (earlier | 678), based on 13x FY13E of | 47.7.
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