Torrent Pharma Q1 Review: Citi Hikes Target Price — Here's Why
Torrent Pharma's India sales grew 11% year-on-year, led by out performance in the focused therapies as its chronic sales grew 13% in Q1.
Citi Research increased the price target for Torrent Pharmaceuticals Ltd. to Rs 4,380 from Rs 4,000, on healthy and in-line quarter and solid traction across the markets. The brokerage maintained a 'buy' rating for the firm.
Torrent Pharma's India sales grew 11% year-on-year, led by out performance in the focused therapies as its chronic sales grew 13% in Q1 vs 9% growth in chronic therapies of IPM, as per AIOCD.
The company's Brazil CC growth stood at 16% year-on-year, and as per IQVIA, Torrent grew 14% vs 5% growth in the market. US sales at US$36 million was up 16% year-on-year (on a low base) while Germany sales was largely flat (in CC) at EUR32 million due to supply disruption at a third party supplier.
The brokerage has raised the target price by rolling forward the target multiple to Mar’27E EPS.
"We maintain our buy rating on the stock as the underlying trends are healthy in the core markets while in the generics, too, we expect improvement in revenues trends and profitability as the facilities have been cleared by the US FDA," it added.
The research firm highlighted, that the company's adjusted Ebitda margin stood at 32.9% - minimum level of margins in the coming quarters.
Citi believes margin expansion trend will continue on the back of operating leverage in the branded segments and potential recovery in the US.
"Investments in the branded segments bode well for the growth outlook as well as capital allocation perspective while the potential operating leverage provides comfort on margin expansion," it noted.
