Buy Torrent Pharma; target of Rs 3200: YES Securities

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YES Securities' research report on Torrent Pharma

Increasing lack of visibility on US sales a blessing in disguise as branded share seen increasing ~200bps to 65% in FY22; similar rerating at IPCA (16x to 26x) was seen in the recent past. Domestic market will increasingly reward players with larger brands- Torrent to maintain growth of big bands like Shelcal and Losar which will continue to gain share. Margins can surprise on upside as MR productivity to touch Rs1mn per MR per month; current revenues per MR already one of the highest in industry. Chronic share is amongst highest and relative to Alembic we reckon Torrent exudes better confidence on growth – hence should trade at a premium to Alembic. Raised our FY22 EPS by ~12% to Rs91 on improved margin assumption and now are ~5% ahead of consensus.

Outlook

Upgrade Torrent to BUY from SELL with revised TP of Rs3,200 (vs Rs2,030 earlier) based on 35x FY22 PE; solid FCF yield of ~3.5% lends support

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