Target: ₹2,250
CMP: ₹2,072.95
Torrent Pharmaceutical Ltd’s (TRP) Q1-FY24 EBITDA was largely in line, however PAT was above our estimate led by lower tax and higher other income. Our FY24 and FY25E EPS stands increased by about 5 per cent as we factor in higher GMs and lower tax. TRP has ₹7,000 crore (75 per cent of total sales) worth of highly profitable branded formulation sales spread across India, Brazil and RoW markets.
Curatio acquisition has been scaling up well with 700 bps margin improvement since acquisition. Historically TRP has successfully managed to integrate Unichem and Elder acquisition which gives us comfort.
Torrent sales adjusted for NLEM impact was 16 per cent, with Curatio portfolio contributing 5 per cent to growth led by Tedibar. During Q1-FY24, acute therapy sales remained sluggish, but the chronic therapy portfolio grew by double digits. On pilot basis started with Shelcal brand and recently also initiated with Unienzyme brand
We expect 18 per cent EBITDA CAGR and 31 per cent PAT CAGR over FY23-25. Maintain ‘BUY’ rating with revised target price of ₹2,250/share (₹1,900 earlier), 20x EV/EBITDA to FY25.