Torrent's Unichem deal to add to its earnings after 3 years

For Unichem investors, larger gains will accrue if international business grows fast

Torrent Pharmaceuticals’ deal to acquire Unichem’s domestic and Nepal-based branded formulation business — 120 brands with revenues of Rs 842 crore — for Rs 3,600 crore, is a step in the right direction, but immediate gains on the earnings front are unlikely.

While factors such as slow growth of Unichem’s portfolio, investments and time required to prop up its growth, increase in leverage (to fund acquisition) and two-three years’ time frame for the deal to turn earnings-accretive may be disheartening, there are reasons to be positive.

The acquisition is Torrent’s fifth in India in the past four years, and it