Anand Rathi
Torrent Pharmaceuticals (Buy)
CMP: ₹1,910
Target: ₹2,265
b) Dahej plant re-inspection likely by June 2020: Remediation work at the two key US sites are ongoing. Management now expects the US FDA to re-inspect the Dahej site (OAI status) by June 2020 and Indrad by December 2020. It expects approvals in FY21 in mid-single digits
Valuation: We expect growth in Torrent’s domestic business to bounce back in FY21, and debt repayment should boost earnings in the next few years. We expect its EPS to register a 29 per cent CAGR over FY19-22 to ₹90 and a about 23 per cent RoE in FY22.
We maintain our ‘Buy’ recommendation and target ₹2,265 at 25x FY22e P/E.
Risks: Pricing risk in the domestic portfolio, currency fluctuations and regulatory issues at plants.