Earnings Outlook
Torrent Pharma PAT seen up 24% YoY on higher sales
This story was originally published at 22:23 IST on 18 July 2024
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By Alina Geogy
MUMBAI – Multinational drugmaker Torrent Pharmaceuticals Ltd is expected to report strong on-year growth in its key earnings metrics for the June quarter owing to strong growth across its key markets, such as Brazil. Higher sales traction from its Curatio portfolio are also expected to aid its earnings. The company's consolidated net profit in Apr-Jun is expected to grow 24.2% on year to 4.70 bln rupees, according to the average of estimates of 10 brokerages.
The Ahmedabad-headquartered company's net sales are expected to rise 12% on year to 29.02 bln rupees, according to the average of estimates. For Apr-Jun of last year, the company had reported a net profit of 3.78 bln rupees, while revenue was 25.91 bln rupees. Torrent Pharma, the flagship company of the Torrent Group, is set to announce its Apr-Jun earnings on Tuesday.
Brokerage estimates for Torrent Pharma's consolidated net profit are in the range of 4.40-5.17 bln rupees, with Nomura Equity Research's estimate at the lower end of the band and YES Securities (India)'s at the higher end. As for the net sales, estimates are in the range of 27.97-29.80 bln rupees. The estimate by Nuvama Wealth Management was the lowest, while that by Motilal Oswal Financial Services was the highest.
The company's performance in the domestic and Brazilian markets is expected to be a major driver of revenue for the June quarter. Several brokerages expect these key markets to continue their double-digit growth trajectory in the reporting quarter.
HDFC Securities and Nirmal Bang expect the company's formulation business in the domestic market to grow 12% on year, led by steady traction in key therapies and consolidation of the Curatio portfolio. Incred Research Services and Nirmal Bang expect the company's Brazil business to grow 15% on year and 30% on year, respectively, aided by new product launches.
Analysts expect steady on-year growth for the company's German business. While Nirmal Bang Institutional Equities expects this business to grow 15% on year, driven by a pick-up in the tender business, Nuvama Institutional Equities expects it to grow 9% but remain flat on quarter.
Meanwhile, sales in the US market are expected to decline or remain flat compared to the previous year due to lack of meaningful launches, according to brokerages. This muted growth in the US business comes despite most sectoral peers being expected to report sequential growth. However, Incred Research Services expects 15% sequential improvement in the US business led by oral oncology products.
Analysts are positive about the completion of acquiring Curatio and believe Torrent Pharma's revenue growth will be driven by Curatio sales. The company had acquired Curatio Healthcare Pvt Ltd, which holds a strong portfolio in cosmetic dermatology, in November 2022. A month later, the company had said it would merge Curatio with itself in a bid to strengthen its financial position and optimise its supply and distribution network.
The estimates by nine brokerage houses for the company's earnings before interest, tax, depreciation and amortisation, or EBITDA, for the June quarter are in the range of 8.74 bln rupees and 9.96 bln rupees, with the average at 9.22 bln rupees.
Nuvama expects margins to be at 31.3% on account of better product mix and lower cost of raw materials. Nirmal Bang said that Torrent Pharma's EBITDA margin for Apr-Jun is expected to remain healthy at around 31%, mainly led by cost rationalisation at the start of 2022-23 (Jan-Mar). Sharekhan also expects margins to be retained at 30% led by synergy from the Curatio acquisition.
Today, shares of Torrent Pharmaceuticals ended 0.2% lower at 1,542.70 rupees on the National Stock Exchange.
Following are the Apr-Jun estimates for Torrent Pharma, in mln rupees, based on reports from 10 brokerages:
| Brokerage | Net Sales | Net Profit | EBITDA |
| HDFC Securities Ltd | 29,174.00 | 4,732.00 | 9,248.00 |
| Incred Research Services Pvt Ltd | 28,822.00 | 4,803.00 | 9,461.00 |
| Kotak Institutional Equities | 29,492.00 | 4,608.00 | 9,288.00 |
| Motilal Oswal Financial Services Ltd | 29,800.00 | 4,900.00 | 9,400.00 |
| Nirmal Bang Equities Pvt Ltd | 29,074.00 | 4,521.00 | 9,071.00 |
| Nomura Equity Research | 28,260.00 | 4,399.00 | 8,767.00 |
| Nuvama Wealth Management Ltd | 27,969.00 | 4,554.00 | 8,741.00 |
| Prabhudas Lilladher Pvt Ltd | 28,658.00 | 4,746.00 | 9,002.00 |
| Sharekhan Ltd | 29,300.00 | 4,520.00 | -- |
| YES Securities (India) Ltd | 29,697.00 | 5,172.00 | 9,960.00 |
| Average | 29,024.60 | 4,695.50 | 9,215.33 |
End
Edited by Tanima Banerjee
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