Buy Torrent Pharma; target of Rs 1665: Edelweiss

We recently hosted Torrent’s Pharma (TRP) management. TRP continues to maintain focus on branded business mix from India and Brazil, which bodes well for sustainable growth in a challenging global environment for pharma sector. In India, the emphasis is on improving productivity of the field force while growing better than market. In Brazil, the company will improve its product filing rate and enhance its product portfolio size by 3x over next 5 years. USA and Germany will be vital spots within generic markets. TRP is significantly ramping up in the US with 100 filings targeted over next 3 years to scale up to USD500mn revenues in medium term. Maintain ‘BUY’ with a target price of INR 1,665. Outlook

TRP has best‐in‐class return ratios (>30% RoCE/RoE) and rich cash flow (>5% FCF yield), despite acquisition of Elder brands, Zyg Pharma and Glochem. Around 50% of the company’s revenues come from branded business, with 65% contribution to profits. Over long term (5 years), TRP plans to scale up in its focus geographies ‐ US (2.5x, 24% of total), Germany (2.5x, 13%) and Brazil (3x, 11%). We maintain ‘BUY/SO’ with TP of INR 1,665 (20x FY18E EPS). At CMP, the stock trades at 16x FY18E EPS. For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.