torrent pharmaceuticals share

Torrent Pharmaceuticals Ltd. – BUY

Recommended PriceRs 2,595
Target PriceRs 3,063
Upside %18%
Investment Horizon1 year

Torrent Pharmaceuticals is a big name in the pharma world, especially known for focusing on long-term treatments. It makes most of its money in India, but also does well in the US, Germany, and Brazil, which are its main markets. The company leads in making medicines for heart and brain health and also has strong products for stomach issues, diabetes, infections, and pain relief. 

Recently, they bought Curatio, a company doing great in skin care. Most of Torrent’s sales in India come from medicines that people need for a long time. They work in over 50 countries and are top-ranked in Brazil and Germany among Indian pharma companies. 

Torrent has eight places where it makes drugs, and the US has approved five of these for meeting high standards. They also put a lot of money into research, with over 750 scientists working on new medicines, showing they’re serious about staying ahead and growing both in India and internationally.

Why invest in Torrent Pharmaceuticals?

Strong chronic focused portfolio to lead India’s business growth

Torrent Pharmaceuticals has been doing really well in India, growing faster than the overall pharmaceutical market, and it looks set to keep up this double-digit growth. Most of its sales, about 75%, come from medicines for long-term health conditions, like heart disease or diabetes, which are becoming more common because of lifestyle changes and better healthcare. 

From 2017 to 2023, their sales in India for these kinds of medicines grew by 17% every year. They’re aiming to sell more in this area by adding new products and focusing on certain cities to grow their market. 

They also plan to launch ten new cancer treatments in the next four years, showing they’re serious about innovation and meeting healthcare needs. By concentrating on generic brands, long-term care, buying other companies, launching new products, having a strong sales team, and investing in research, Torrent Pharma has become a top player in the health industry. This strategy should keep them on the path of growth, especially in selling medicines for chronic conditions.

Curatio acquisition provides an entry into the lucrative dermatology segment

Torrent Pharmaceuticals bought Curatio Healthcare to grow its business and enter the fast-growing skin care market. Curatio is known for its skin care products, including popular brands like Tedibar and Atogla, which are among the top sellers in their categories. This move adds 600 salespeople and 900 stockists to Torrent’s network, making it a big player in dermatology, especially in cosmetic skin care. 

The purchase has already made Torrent more profitable, with Curatio’s top brand, Tedibar, making over Rs. 100 crore in sales and still growing. Curatio’s sales for the last financial year were Rs 224 crores, and its profit margins have improved by 7% since being bought by Torrent. Dermatology makes up 82% of Curatio’s sales, with cosmetic dermatology being a major part. 

The cosmetic skin care market has been growing really fast, and Curatio has been a strong competitor there. With this acquisition, Torrent jumps from the 21st to the 7th spot in dermatology rankings, strengthening its position in the market and expanding its range of products in a segment that’s seeing rapid growth.

Brazil, Germany and US markets provide ample opportunities for sustainable growth

Torrent Pharmaceuticals operates globally, doing well in Brazil and Germany but facing challenges in the US. In Brazil, it’s the top Indian pharma company with a strong lineup of products for brain, heart, and diabetes treatments. It plans to release new products each year to grow its business there. 

Germany sees Torrent as a major player too, thanks to smart product launches and strategies to win more contracts. However, the US market is tough due to dropping prices and waiting for new products to be approved by the FDA. Despite these issues, Torrent aims to keep its business profitable in the US by getting approvals for new drugs and focusing on treatments for chronic diseases. Overall, Torrent is working on expanding its product range and increasing its presence in these key markets to ensure long-term growth.

Strong operational performance and debt reduction to drive financial performance

Between 2018 and 2023, Torrent Pharma’s revenue grew by 10.1% yearly, thanks to its successful branded products, introducing new products, expanding its sales team, and making strides in Brazil and the US markets. They’ve also improved in selling generic drugs, won contracts in Germany, and got approval from the USFDA for their facility, setting them up for future success. 

The company is making more profit now because they’re spending less on materials, their sales team is doing better, and they’ve found ways to save money. Their return on capital increased because of these higher profits, and they’ve also managed to significantly lower their debt, making their financial situation stronger. This puts Torrent Pharma in a good spot to buy other companies or merge, showing they’re ready to grow and continue succeeding.

Valuation and Outlook

Torrent Pharma has seen its revenue grow thanks to its strong performance in India, particularly with long-term treatments, new product releases in areas like diabetes and heart health, and the expansion of its Curatio skincare brand. It’s also boosting its wellness products, planning to grow in Brazil with new treatments and more salespeople, and in Germany through winning more contracts. Looking to the future, Torrent aims to make a comeback in the US by launching new products from its Dahej plant starting from 2025. The company is working on being more cost-effective and expanding its over-the-counter (OTC) medicine range. With a solid base in the domestic market and strategies for growth both in India and internationally, Torrent Pharma is expected to keep improving its sales and profits. The company is considered a good buy by analysts, with predictions of an 18% increase in its share price.

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