Accumulate Torrent Pharmaceuticals; target of Rs 3850: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Torrent Pharmaceuticals with a target price of Rs 3850 in its research report dated July 01, 2025.

Broker Research

July 01, 2025 / 14:02 IST

Accumulate

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Torrent Pharmaceuticals

Torrent Pharma’s (TRP) acquisition of JB Chemicals & Pharma (JBCP) appears strategically compelling, making it the 5th largest player in the domestic pharma market. This will further be strengthening its position in high-margin chronic therapies and opens up many newer therapeutic areas. The deal also adds JBCP’s CDMO vertical, offering diversification and growth optionality. The acquisition is likely to be debt-funded requiring Rs 122bn to fund acquisition upfront. We see JBCP current OPM of 27–28% to scale to 31-32% (similar to current TRP margins) via sourcing efficiencies, cost rationalization, and pricing actions on keys brands. Historically TRP have managed to integrate successfully Unichem, Elder and Curatio acquisition which gives us comfort.

Outlook

JBCP is trading at 25x P/E and 16.7x EV/EBITDA on FY27E. This represents a ~25–28% valuation discount to TRP’s current trading multiples. The deal is considered financially attractive and strategically sound with long -term earnings accretion. TRP trades at 40x P/E and 21.5x EV/EBITDA on FY27E for the combined business. We maintain our Accumulate with TP of Rs3,850/share, valuing at 25x EV/EBITDA on FY27E for combined entity.

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