Earnings Outlook
India sales to help Torrent Pharma consol PAT rise 16% YoY
This story was originally published at 13:58 IST on 19 May 2025
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By Sunil Raghu
AHMEDABAD – A double-digit growth in the domestic formulations business and steady-to-better growth in the German and US markets could help drug manufacturer Torrent Pharmaceuticals Ltd. report a relatively stronger on-year growth for the March quarter. The company's consolidated net profit for the March quarter is expected to grow nearly 16% on year to INR 5.2 billion, according to the average of estimates of 12 brokerages.
The Ahmedabad-headquartered company's net sales are expected to rise nearly 9% on year to INR 29.8 billion, according to the average of these estimates. On a sequential basis, the bottom line is seen rising more than 3% and the top line is seen rising over 6%.
Torrent Pharma, the flagship company of the Torrent group, will announce its Jan-Mar earnings on Tuesday. The company had reported a consolidated net profit of INR 4.5 billion on a revenue of INR 27.5 billion for the same quarter last year.
Brokerage estimates for Torrent Pharma's consolidated net profit are in the range of INR 4.7 billion to INR 5.7 billion, with Nirmal Bang Equities Pvt. Ltd.'s estimate at the higher end of the band and JM Financial Institutional Securities Pvt. Ltd.'s estimate at the lower end. As for net sales, estimates are in the range of INR 28.5 billion to INR 30.6 billion. The estimate by ICICI Securities Ltd. is the highest and the one by HDFC Securities Ltd. is the lowest.
KEY MARKETS
The domestic business is seen achieving robust growth in the March quarter, driven by strong traction in its key therapies of cardiac and gastro. Motilal Oswal Financial Services sees Torrent Pharma's domestic formulations business growing 12.7% on year in the March quarter to INR 15.5 billion due to strong growth in key therapies. Nirmal Bang Equities Pvt. Ltd. sees Torrent Pharma's domestic business growing more than 11% on year, driven by the consolidation of Curatio Healthcare, other than strong growth in key segments. The pharma company had acquired Chennai-based Curatio Healthcare in 2022 to strengthen its dermatology portfolio. HDFC Securities Ltd. sees a 13% on year growth for Torrent Pharma, on steady traction in key therapies and resumption of supply from its insulin plant.
Motilal Oswal believes the company's domestic formulations business will grow to INR 15.5 billion due to strong growth in key therapies such as the cardiac, gastro, and anti-diabetic segments. Torrent Pharma derives nearly three-fourths of its revenue in India from chronic and sub-chronic therapies.
Among the global markets Torrent Pharmaceuticals operates in, the brokerages hold mixed views about sales growth in the US, a key market for the company, as well as Germany and Brazil, the other two important markets for Torrent Pharma.
For the US market, HDFC Securities Ltd. and Nirmal Bang Equities expect Torrent Pharma's growth to remain flattish on quarter, due to lack of meaningful launches and continuous price erosion. Kotak Institutional Equities also sees Torrent Pharma's US sales flat on quarter at $32 million. Motilal Oswal, however, expects Torrent Pharma's US sales to grow 8% on year to $35 million, due to a low base and despite fewer launches in the US compared to peers.
Nirmal Bang sees Torrent Pharma's business from Germany flat on year due to uncertainty in the tender business. While HDFC Securities sees a steady growth and Kotak Equities sees a 7% on year growth for the pharma company in Germany. In the March quarter of FY24, the company's revenue from operations was up 16% on year at INR 10.74 billion.
Nirmal Bang sees a 20% on year decline for Torrent Pharma in the Brazilian market, while Kotak Equities expects a 3% rise in revenue for Torrent Pharma from this South American nation. HDFC Securities sees depreciation in the Brazilian currency leading to an on-year decline in Torrent Pharma's business in the South American country.
MARGINS
The company's earnings before interest, taxes, depreciation, and amortisation margin in the March quarter is expected to expand on year, according to most brokerages. Steady costs and higher gross margins could drive an on-year expansion in the EBITDA margin, according to HDFC Securities. Kotak Equities sees Torrent Pharma's EBITDA margin expanding 40 basis points on year to 32.6%.
Estimates by 12 brokerages for the company's EBITDA in the March quarter are in the range of INR 9.3 billion to INR 10.2 billion, with the average at INR 9.8 billion.
Motilal Oswal said updates on the traction of branded generic markets in newer geographies and progress in product pipeline for the US market are crucial to watch. It said the progress of the over-the-counter portfolio expansion and further investment to grow the India business are other factors to watch.
Among the dozen brokerages polled, four have given an "add" call on Torrent Pharma shares, two gave a "sell" call, one a "hold" call and one with a "neutral" stance and four having no recommendation on whether the investors should buy, sell or hold the stock.
At 1354 IST, shares of Torrent Pharma were at INR 3,302.90 on the National Stock Exchange. This is 1.7% higher than INR 3,248.40 at close on Jan. 24, when the company announced its December quarter earnings.
Following are the earnings estimates for Torrent Pharmaceuticals' March quarter earnings from 12 brokerage firms in the descending order by the estimate of net profit:
Brokerages | Net Sales | Net Profit | EBITDA |
----------(in INR Million)------------ | |||
Nirmal Bang Equities Pvt Ltd | 30,557.00 | 5,695.00 | 9,536.00 |
Prabhudas Lilladher Pvt Ltd | 29,737.00 | 5,386.00 | 9,925.00 |
ICICI Securities Ltd | 30,574.00 | 5,317.00 | 10,181.00 |
Nuvama Wealth Management Ltd | 30,521.00 | 5,272.00 | 9,793.00 |
Equirus Securities Pvt Ltd | 30,537.00 | 5,250.00 | 10,196.00 |
Nomura Equity Research | 29,955.00 | 5,206.00 | 9,844.00 |
Kotak Institutional Equities | 29,949.00 | 5,189.00 | 9,749.00 |
Elara Securities (India) Pvt Ltd | 29,626.00 | 5.170.00 | 9,681.00 |
HDFC Securities Ltd | 28,517.00 | 5,045.00 | 9,337.00 |
Centrum Broking Ltd | 28,883.00 | 5,004.00 | 9,427.00 |
Motilal Oswal Financial Services Ltd | 29,300.00 | 5,000.00 | 9,700.00 |
JM Financial Institutional Securities Pvt Ltd | 29,800.00 | 4,743.00 | 9,810.00 |
Average | 29,829.67 | 5,189.75 | 9,764.92 |
End
US$1 = INR 85.40
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Nishant Maher
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