Torrent Pharmaceuticals Ltd.

Established in 1959, Torrent Pharmaceuticals Ltd (Torrent Pharama), with an annual turnover of over `4,700 crore is the flagship company of the Torrent Group. Torrent Pharma ranked 15th (by turnover) in the domestic formulations market with six of its brands among the top 300 brands in India. The company is a leading player in the key chronic segments such as cardiovascular (CVS) and central nervous systems (CNS) in India. The company’s international presence spanning over 40 countries with over 1,200 product registrations. The company has three manufacturing facilities at Indrad (Gujarat), Baddi (Himachal Pradesh) and Sikkim. The company’s new facility is taking shape at Dahej SEZ in Western India, which will cater to the international markets.

Valuation and view

With new product launches and improved productivity, better growth traction in Brazil coupled with recovery in domestic formulations business beginning H1FY16E, the company sees increase in volume. We believe that strong product pipeline and growing domestic as well as international business make the company an attractive investment opportunity for the long-term investors. Further, the company’s acquisition of Elder’s domestic formulation business to add more brands to its existing portfolio, which is turn, would further enhance its growth visibility.

At a current market price (CMP) of Rs 1,297, the stock trades at an EV/EBITDA of 18x FY16E and 14.4x FY17E. We recommend ‘BUY’ with a target price of Rs 1,504, which implies potential upside of ~16% to the CMP from long term perspective.

Research Report Torrent Pharmaceuticals Ltd

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