Shares of Torrent Pharmaceuticals soared 7 percent on May 27 to scale a record high of Rs 2,795 apiece as investors cheered for the company's strong Q4FY24 results and a robust growth outlook for the coming time. In addition, bullish growth prospects for the company, as painted by a slew of brokerages, further bolstered sentiment.
Jefferies was impressed by Torrent Pharma's industry-beating performance in the India market along with a recovery in Brazil and Germany markets. Going by the drugmaker's sustained margin improvement in its India and international operations, Jefferies pegs a 14 percent EBITDA CAGR over FY24-26.
"The drugmaker's consistently strong operating performance should allow further re-rating," Jefferies stated. The brokerage has a 'buy' call on Torrent Pharma shares with a price target of Rs 3,070 apiece.
Meanwhile, Torrent's management also forecast an optimistic growth outlook, targeting to deliver an all-round performance in FY25 as well. The management expects to sustain double-digit growth in the India and Brazil branded generics markets while Germany is expected to clock another year of 8 percent year-on-year growth due to new tenders and launches.
In addition, the company's performance in the US market is also expected to drive into a growth path due to new launches with compliance restored at its Dahej facility.
Nuvama Institutional Equities is bullish over the company's plans, predicting its RoCE (return on capital employed) to move past 30 percent in FY26. Nuvama also slightly raised its price target for Torrent Pharma to Rs 3,000 while retaining its 'buy' call on the stock.
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Nomura also finds the bullish management commentary from Torrent Pharma as a big positive, prompting it to retain its 'buy' call on the stock, with a price target of Rs 2,975.
Motilal Oswal Financial Services is another brokerage that anticipates strong growth for Torrent Pharma. "With field force expansion, new launches and market share gains in existing products, Torrent Pharma continues to exhibit superior growth in branded generics segment across domestic formulation and Latin America," MOFSL said.
However, even though MOFSL expects a CAGR of 15 percent, 18 percent and 31 percent in revenue, EBITDA and PAT over FY24-26, it still chose to keep a 'neutral' call on the stock, citing that its current valuations already factor in its earnings upside. MOFSL has a price target of Rs 2,575 for the stock.
Torrent Pharma reported a 57 percent rise in its consolidated net profit for the January-March quarter at Rs 449 crore as against Rs 287 crore in the year-ago period. Revenue also grew by 10 percent to Rs 2,745 crore from Rs 2,452 crore a year ago. The subdued show in the US was offset by superior growth in Latin America, India and ROW (Rest of the World) markets.
The drugmaker also delivered EBITDA margin of 32.2 percent in Q4FY24, up 260 basis points on an annual basis and also the highest in eight years.
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