Reduce Torrent Pharma; target of Rs 2863: Dolat Capital Market
Dolat Capital Market recommended reduce rating on Torrent Pharma with a target price of Rs 2863 in its research report dated October 26, 2020.
October 29, 2020 / 11:10 AM IST
Dolat Capital Market's research report on Torrent Pharma
In 2QFY21, Torrent reported muted performance in its key export markets – US (20% YoY decline), Brazil (17% YoY decline, primarily due to currency depreciation) while India (7% YoY growth) aided in flattish revenues for the quarter, in-line with our estimates. However, EBITDA margin at 31.5% were marginally better than expectation led by controlled fixed costs. With field activities resuming normalcy (~75- 80% in both Indian and Brazilian market), we expect cost structure to normalize in next 2 quarters.
At CMP, stock trades at 32x FY22 and 27x FY23 EPS of Rs84.4 and Rs99.6 respectively. Given the higher contribution from branded markets (~60% of revenue), higher exposure to chronic therapies in domestic business and healthy FCF (~Rs8bn in FY20-23E), we value Torrent at ~20% premium to other large cap pharma stocks. Our target price of Rs2,863 is 28x FY23 EPS of Rs99.6 Maintain Reduce.
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