Torrent Pharma rallies 8% on good Q1 results

The stock hit a 52-week high of Rs 1,652, up 8% on the BSE.

Torrent Pharmaceuticals has rallied 8% to Rs 1,652, also its 52-week high on the BSE after the company reported a better-than-expected 37% year-on-year (YoY) growth in its consolidated revenues at Rs 18.72 billion in June quarter (Q1FY19).  The company’s India business recorded 79% YoY growth and US business posted 23% YoY growth during the quarter.

“The company’s net profit during the quarter under review declined by 13.3% YoY at Rs 1.63 billion as against Rs 1.88 billion during the same period last year due to amortisation impact of branded business of Unichem Laboratories in Dec'2017 and lower foreign exchange gains,” Torrent Pharma said in a statement.

Analysts at Emkay Global Financial Services had expected revenue growth of around 25% yoy (flat qoq) at Rs 17.2 billion, driven by healthy growth in the domestic business. US revenue to grow by around 10% yoy, led by few product launches.

Analysts at Motilal Oswal Securities had expected Torrent Pharma to post around 32% YoY revenue growth in Q1FY19 reported sales to Rs 18.1 billion. US business is expected to increase around 13% YoY, while India business is expected to witness 60% YoY growth on integration of Unichem’s domestic portfolio, the brokerage firm said in results preview.

“Torrent Pharma reported better-than-expected numbers on the back of steady price hikes across the erstwhile Unichem portfolio and cost rationalization measures. For the US business, the company believes that the worst of the pricing pressure is behind with the base business likely to see a gradual pick-up. This vindicates our view that the cyclical part of pricing pressure is well and truly over, as further PBM consolidation is unlikely,” analysts at Emkay Global Financial Services said in result update.

“With Unichem acquisition, Torrent will generate around 63% of revenue or Rs 57 billion from branded generics. Although acquisition will depress profit and ratios in the near term, we remain positive for the medium term, given integration benefits, thereby making Torrent a stronger firm in the domestic market. Further, benefits of increased filing in the US along with the recent Bio-Pharma acquisition also would see a scale-up in the US,” analysts at Elara Capital said in quarterly update. The brokerage firm retain ‘accumulate’ rating on the stock with 12 month target price of Rs 1,730.

At 10:16 am; the stock was trading 7% higher at Rs 1,635 on the BSE, as compared to 0.66% rise in the S&P BSE Sensex. The trading volumes on the counter surged more than five-fold with a combined 777,638 equity shares changed hands on the BSE and NSE so far.