Torrent Pharma's performance in the first quarter of FY25 has impressed brokerages, showcasing strong domestic growth, a robust margin profile, and an expanding presence in the US market.
This solid performance has driven a bullish outlook for the company. Shares of Torrent Pharma have yielded over 31 percent returns in 2024 so far.
The pharmaceutical company's impressive results for the April-June quarter have drawn favorable attention from analysts.
They highlight Torrent Pharma's strong domestic performance, healthy margins, and growing footprint in the US as key drivers of future growth.
The company reported a 20 percent increase in net profit for Q1 FY25, reaching Rs 457 crore, while revenue grew by over 10 percent to Rs 2,859 crore.
Jefferies noted that this revenue growth was impacted by one-off costs; without these, the increase would have been even more substantial.
Despite the strong performance domestically, sales in Brazil were less impressive, hindered by floods and currency depreciation.
However, Torrent Pharma is actively working to diversify its market presence, focusing on strengthening its position in Germany and the US.
The company has improved its tender win rate in Germany through cost reduction initiatives, enhancing its competitiveness.
In the US, anticipated new product approvals are expected to boost sales growth.
Brokerages such as Jefferies and Nuvama Institutional Equities are optimistic about Torrent Pharma's future.
Jefferies expects continued strong performance and accelerated growth in international markets in the coming quarters.
Nuvama also forecasts ongoing double-digit revenue growth driven by the domestic chronic business, recovery in Brazil, and tender wins in Germany.
Jefferies also praised Torrent Pharma’s margin profile, noting an expansion in the EBITDA margin to 31.6 percent from 30.5 percent a year ago.
The company's gross margin surged to a multi-year high of 75.7 percent, driven by robust growth in the Indian market.
Jefferies believes Torrent Pharma is positioned to perform exceptionally well, with high sales growth and favorable raw material prices contributing to margin improvements.
The firm has maintained its 'buy' rating on the stock with a price target of Rs 3,540.
Similarly, Nuvama has reiterated its 'buy' recommendation, raising its price target for Torrent Pharma to Rs 3,606.
Analysts also views Torrent Pharma positively, highlighting its significant revenue from branded generics and strong performance in domestic and Brazilian markets.
As of 09:20 am, Torrent Pharma's shares were trading 3.4 percent lower at Rs 3,032.80 on the NSE.
