Buy Torrent Pharmaceuticals; target of Rs 4232: Sharekhan

Sharekhan's research report on Torrent Pharmaceuticals

Torrent’s revenue reached Rs. 2,889 crore, reflecting a 9% y-o-y increase and a 1% q-o-q rise, driven by growth in key geographies. EBITDA stood at Rs. 939 crore, up 14% y-o-y and 4% q-o-q. Margins reached 33%, up 149 bps y-o-y and 88 bps q-o-q.Insulin revenue during the quarter was affected by a scheduled maintenance shutdown in August. The facility is expected to resume manufacturing in December. The shortfall is anticipated to be largely recovered in the fourth quarter of this year, ensuring that there will be no impact on an annual basis.

Outlook

A healthy product mix is expected to result in a 50-100 bps increase in margins annually. At the CMP, the stock trades at a valuation of 45x and 36x its FY2026E and FY2027E earnings, respectively, and due to its high-margin profile and healthy product mix, we arrive at a TP of Rs. 4,232.