Torrent Pharmaceuticals Ltd. Quarterly Results Q3FY26 stock analysis

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Sector Outlook: Positive

Branded strength and global expansion propel sustained growth across key markets

Torrent Pharma reported revenue growth of 17.6% YoY / flat QoQ to Rs. 3,303 crores, above market expectations of Rs. 3,098 crores. The India business outperformed the market with 14% growth comprised of 5.5% volume, 5.8% price, and 2.7% from new products further bolstered by a 27% increase in the Curatio segment and an aggressive field force expansion targeting approximately 7,500 personnel by FY27. Internationally, Brazil saw a healthy 10% constant-currency growth despite muted pricing, while the German segment declined 6% due to unresolved third-party supplier disruptions, and the US business grew 12% as it targets a $200 million annual run rate in FY27. EBITDA increased 19.0% YoY / up 0.5% QoQ to Rs. 1,088 crores, while EBITDA margin stood at 32.9% (above 40bps YoY / up 14bps QoQ) in Q3FY26. Profit after Tax stood at Rs. 635 crores (up 26.2% YoY / up 7.4% QoQ) in Q3FY26. The PAT margin was 19.2% versus 17.9% in the previous quarter. Strategically, the acquisition of a 48.8% stake in JB Pharma has transitioned to line-by-line consolidation, with management forecasting cost synergies of Rs. 400-450 crores over three years and plans to discontinue JB’s zero-margin trade generics to improve margins. Looking ahead, Torrent is prioritising the launch of the semaglutide opportunity in India and Brazil. The Brazilian regulator (ANVISA) is reportedly prioritising these approvals, and Torrent expects to be among the first five players to launch.

Valuation and Outlook

Torrent Pharmaceuticals demonstrated a robust performance during the quarter, characterized by high double-digit growth in its core branded markets and the strategic consolidation of a major acquisition. The company continues to operate with a structurally strong operating margin, driven by its high-margin India- and Brazil-branded businesses. Growth visibility remains healthy across key geographies. India continues to outperform IPM with a 14% growth driven by volume and focused therapy expansion, while Brazil is guided to grow at 10-15% (ex-semaglutide), supported by new launches and volume momentum. In the German business, within three to four quarters, as products transition away from disrupted third-party suppliers, the US segment is positioned to achieve a $200 mn annual run rate by FY27, driven by a target of five to seven new launches per year. Further, the company maintains a positive growth outlook centred on sustaining India’s market outperformance through a field force expansion reaching 7,500 by FY27 and the integration of JB Pharma, which is projected to deliver Rs. 400-450 crores in cost synergies over three years. A vital strategic focus remains the semaglutide (GLP-1) portfolio, with an India launch slated for next quarter and prioritized regulatory approval in Brazil, expected to capitalize on a large market opportunity despite projected price erosion of 45–50%. Overall, the outlook remains positive, led by strong branded franchise resilience, synergy-led margin accretion, visible deleveraging trajectory, and optional upside from complex generics and GLP-1 launches.

Key concall Highlights

Indian Business Outlook:

The India business outlook remains robust, supported by sustained outperformance in core chronic therapies and strong execution. The company reported 14% YoY growth in Q3FY26, ahead of IPM growth of ~10%, indicating continued market share gains. The performance was anchored by cardiac, gastro, and diabetes portfolios, reinforcing the structural strength of its chronic-heavy mix. The Curatio dermatology franchise maintained strong momentum, driven by OTC investments and field force expansion, with management confident of sustaining healthy growth in the near term. While the JB Chemicals acquisition may result in modest transition-related moderation in Q4, management expects normalization from Q1 onward. Initial synergies are expected to be cost-led, with meaningful revenue synergies likely from Year 2 post-integration.

Field Force Expansion:

The company continues to strengthen its domestic execution capabilities through calibrated expansion of its field force. MR strength increased to ~6,900 (vs ~6,800 in the prior quarter), with guidance to exceed 7,000 by FY26 and visibility toward ~7,500 by FY27. The expansion aligns with the strategic focus on chronic and sub-chronic therapies, enabling deeper doctor engagement, improved territory penetration, and sustained above-market growth.

R&D:

The company’s R&D efforts in India remain directed toward strengthening the chronic portfolio through incremental innovations, new product introductions, and lifecycle management of existing brands. On the global front, the pipeline is being augmented with 5-7 launches annually targeted in the US, contingent on regulatory timelines. Additionally, filings in Brazil for semaglutide products have been prioritized by the regulator, indicating progress on high-value pipeline assets.

US Business Outlook:

The US business is positioned for gradual recovery from a relatively small base. Q3 revenues stood at ~$36 million (12% constant currency growth), driven by new launches and improved contract volumes. Management acknowledged that the current annualized run rate of ~$150-160 million remains below potential and has indicated a target to cross $200 million annually, potentially by FY27, contingent on timely approvals and launch execution. The company plans 5-7 launches annually, with performance highly dependent on launch timing and competitive intensity.

Brazil Business Outlook:

Brazil continues to deliver steady growth, with Q3 constant-currency growth of ~10%, outpacing the ~7% market growth. Growth was supported by volume expansion and mid-single-digit pricing gains, though pricing growth has moderated amid lower inflation and competitive pressures. Ex-semaglutide, management guides for 10-15% medium-term secondary sales growth, supported by 5-6 annual launches. Semaglutide (Ozempic and later Wegovy equivalents) remains a key optionality, with filings under priority review at ANVISA, although pricing erosion could be significant depending on competitive intensity.

German Business Outlook:

The German business remains temporarily impacted by supply-side disruptions at a third-party supplier, resulting in a 6% constant currency decline in Q3FY26. Management indicated that the impact is fully reflected in current performance, with limited visibility on resolution timelines. Efforts are underway to qualify alternative suppliers and shift production to internal facilities; however, normalization may take 3-4 quarters due to regulatory processes in Europe. The issue is operational rather than structural, and recovery is expected upon supply stabilization.