Buy Torrent Pharmaceuticals; target of Rs 2865: ICICI Direct
ICICI Direct is bullish on Torrent Pharmaceuticals has recommended buy rating on the stock with a target price of Rs 2865 in its research report dated July 31, 2020.
August 03, 2020 / 04:15 PM IST
ICICI Direct's research report on Torrent Pharmaceuticals
Q1 revenues grew 1.7% YoY to Rs 2056 crore (I-direct estimate: Rs 2063 crore) mainly due to muted domestic sales amid Covid-19, which grew 2.0% YoY growth to Rs 925 crore. US formulations de-grew 0.8% YoY to Rs 373 crore due to base business price erosion and lack of new launches. Rest of world (RoW) markets grew 33% YoY to Rs 234 crore. EBITDA margins expanded 539 bps YoY to 32.1% (I-direct estimate: 27.0%) mainly due to change in product mix and lower travel & promotional spends. EBITDA grew 22.2% YoY to Rs 661 crore (I-direct estimate: Rs 557 crore). PAT grew 48.6% YoY to Rs 321 crore (I-direct estimate: Rs 245 crore). Delta vis-à-vis EBITDA was mainly due to lower tax rate and interest cost.
The company’s portfolio is finely balanced between India, Brazil, Germany and the US with Indian being the leader. With consistent FCF generation and moderation in core capex, we expect the leverage situation to improve substantially. With these key characteristics we believe the premium valuation is justified. We upgrade to BUY with a revised target price of Rs 2865 (30x of FY22E EPS of Rs 95.5).
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