Torrent Pharma rebounds 9% from day's low on heavy volumes

The US Food and Drug Administration (USFDA) has issued a warning letter to Torrent Pharma's Indrad (Gujarat) API and formulations facility.

Shares of Torrent Pharmaceuticals on Thursday rebounded around 9 per cent from the day’s low on the BSE as the company said the warning letter (WL) for Indrad facility will not have an impact of disruption of supplies or the existing revenues from operations of this facility.

The stock ended at Rs 1,690.10 apiece on the BSE, up around 1.50 per cent.  During the day, shares of the drug maker slipped to Rs 1,555 after the company on Wednesday announced that the US Food and Drug Administration (USFDA) has issued a warning letter to its Indrad (Gujarat) API and formulations facility.

“This action follows the earlier intimation received from US FDA in August 2019, wherein the agency had classified its inspection as "Official Action Indicated" (OAI)”, the company said in a regulatory filing.

Indrad is an important facility for Torrent Pharma, as it contributes around 80 per cent to its US sales. Currently, total of 34 products are pending for approvals. Analysts at Reliance Securities expect new product approvals will be impacted in future until the plant gets regulatory clearance.

“Torrent Pharma is a relatively safer play in current scenario due to higher revenue contribution from domestic business, while lower exposure to US offers comparatively better earnings visibility. We have already factored in US FDA pending issues at Dahej and Indrad facilities into our model in 1QFY20 only. Looking ahead, the Management sees strong growth across geographies except the US,” the brokerage firm said in an event update and maintains ‘hold’ rating on the stock.