Buy Torrent Pharma, target of Rs 200: Karvy

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Karvy Stock Broking has recommended a buy rating on Torrent Pharmaceuticals with a target of Rs 200 in its January 13, 2009 research report. "We expect the company's key growth enablers, domestic formulation business and generics business in Brazil, Russia and Europe set to grow the top-line at a CAGR of 15.3% from Rs 13.55 billion in FY08 to Rs 18.02 billion in FY10. We anticipate the EBITDA margins to expand from 15% in FY08 to 16.9% in FY09E and 17.7% in FY10E on back of improved profitability and higher volumes in international operations, cost saving initiatives like site transfer of products to India and better product mix."

'The bottom-line is expected to grow at a CAGR of 25.6% from FY08 to FY10E on back of incremental revenue flow, expansion in operating margins and lower taxes. Currently, Torrent Pharma is quoting at attractive valuations of PE of 5.1x on FY10E. Considering improving return ratios and critical size of Rs 15.7 billion in FY09E, we believe the company is a BUY with the price target of Rs 200 on PE of 8x FY10E EPS at Rs 25.1," says Karvy Stock Broking's research report.

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