Torrent Pharma tanks 4% post Q1FY25 results; analysts update target prices

Shares of Torrent Pharma slumped up to 4.26 per cent at Rs 646.70 per share on the BSE in Tuesday's intraday deals. This came despite the Indian drugmaker delivering a strong April-June quarter

Shares of Torrent Pharma slumped up to 4.26 per cent at Rs 646.70 per share on the BSE in Wednesday's intraday deals. This came despite the Indian drugmaker delivering a strong April-June quarter for the financial year 2024-25 (Q1FY25). However, some analysts have cut the target price of the company considering its significant run up in the last three months. 

The pharma major delivered a solid June quarter, with net profit growing 21 per cent year-on-year (Y-o-Y) to Rs 457 crore, up from Rs 378 crore in the corresponding period last year. 

The company's revenue from operations also saw a growth of 10 per cent Y-o-Y, rising to Rs 2,859 crore compared to Rs 2,591 crore in Q1FY24.

At an operational level, too, Torrent Pharma achieved an earnings before interest, taxes, depreciation, and amortisation (Ebitda) of Rs 904 crore, maintaining an Ebitda margin of 32.3 per cent.

Analysts at Nuvama Institutional Equities stated that Torrent Pharma’s Q1FY25 performance was in-line with consensus estimates while its adjusted performance i.e Ebitda margin and PAT growth was ahead of the estimates.

That apart, floods in Rio Grande do Sul restricted the company’s growth in Brazil to 3 per cent Y-o-Y else the performance would have been even better for the pharmaceutical company, analysts noted. 

Going forward, new tender wins will drive growth momentum in Germany while new launches may improve traction in the US, the brokergage firm ICICI Securities stated.  

The company should continue to experience double-digit revenue growth led by domestic chronic business, post-flood recovery in the Brazil business and tender wins in the German business, analysts at Nuvama said. US growth remains hurt in absence of meaningful launches, but FY26E may boost its performance with new launches, they added.

“We raise our FY25/26E Ebitda by 2 per cent each to factor in better margins. As the stock has given a return of 19 per cent over the past three months, we lower our rating to ADD; raise target price to Rs 3,360 on 25 times the FY26E EV/Ebitda,” said Abdulkader Puranwala and Nisha Shetty of ICICI Securities said in a report. 

Nuvama on the other hand maintained its ‘Buy’ call on the company with a target price of Rs 3,606. The brokerage expects Torrent’s revenue and PAT growth of 10 per cent and 24 per cent, respectively over FY24-27. 

At 11:30 AM; the shares of the pharma company were trading 2.92 per cent lower at Rs 3045.65 per share on the BSE. By comparison, the BSE Sensex was down 0.29 per cent at 80,194 levels.