Torrent Pharma Q1 net may fall 23%, rev seen down; US biz key

Torrent Pharma is likely to post net profit at Rs 344.7 crore in April-June quarter, down 23.2 percent from Rs Rs 449 crore in corresponding quarter last fiscal. According to a CNBC-TV18 poll, the pharma company's Q1 net revenue may also slip 17.3 percent to Rs 1609.9 crore compared to Rs 1947 crore on annual basis.

Steeper-than-anticipated decline in revenue and US business will be considered weak despite high base. Margin decline below 30 percent will be taken as a disappointment. India growing less than 10 percent will be considered subdued.

During the quarter, its EBITDA in Q1 may fall 43 percent to Rs 521.22 crore against Rs 909 crore while operating profit margin may stand at 32.4 percent versu 46.7 percent (down 23.2 percent) year-on-year.

Topline may come off due to high base as in Q1FY16 Torrent Pharma benefited from sales of mental health drug Abilify hence saw a 75 percent increase in sales. Abilify generic drug could contribute around USD 22 million in sales this quarter. Thereby, US sales may decline by USD 70 million on annual basis and USD 5 million sequentially. In Indian currency, US Sales may fall over 45 percent (YoY).

Analysts polled by CNBC-TV18 say India is likely to grow over between 11-13 percent (YoY) after four quarters of restructuring. However, India is likely to be still impacted by removing drugs under fixed dose combination (FDC), under national list of essential medicines (NLEM) list.

In Q1, margins may slow down because of overall base impact due to US business and seasonality and higher R&D spend. It will be crucial to watch for improvement in Brazil after a decline of 16 percent in Q4. Few analysts estimate it to grow around 5 percent and others see decline of 10 percent (YoY) due to currency headwinds.