Moneycontrol Bureau
Credit Suisse has upgraded Torrent Pharmaceuticals to outperform from neutral with a target price of Rs 1,500 apiece. The stock gained more than 3 percent intraday Friday.
According to its note, company's valuations are attractive at 15.6 times FY18 earnings per share with higher than peers returns and lower risk as Torrent's US plants have a clean FDA status and its stable India business accounts for half the profits.
The brokerage says the company has surprised positively on improved execution in both India (Elder integration) and the US (higher market share), adding capacity constraints in both US and European Union get addressed with commissioning of the Dahej plant.
It feels concerns of a weak US pipeline eased as Torrent has increased efforts and filing should pick-up from the next quarter.
Torrent has significantly improved margins in India and is now one of the most profitable companies. This is achieved through 70 percent increase in sales force productivity since the Elder acquisition.
According to Credit Suisse, key catalysts are a pick-up in US filings, which should be visible from the next quarter; and Dahej plant starts supplying to the US (expected to be from next quarter) & European Union (expected to be in 2HFY17).Another positive news is that Torrent Pharma has received establishment inspection report from the US health regulator for its Dahej SEZ plant in Gujarat. Prior to this approval, plant also received approval from the European Union Germany.With this, three out of five plants of company have received US FDA nod. Its other USFDA approved plant includes Indrad, Gujarat and Pithampur (Indore), MP.
"Phase I has an installed capacity of about 7,500 million tablets/capsules and 25 MT API per annum and construction of phase II will increase total capacity to about 14,000 million tablets/capsules & 80 MT API per yesr," says the company.
At 10:36 hours IST, the scrip of Torrent Pharmaceuticals was quoting at Rs 1,279.00, up Rs 22.55, or 1.79 percent on the BSE.Posted by Sunil Shankar Matkar
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