Sector Outlook: Positive
Strong performance continues across focused markets
Torrent Pharma reported a revenue increase of 10.3% YoY and 4.2% QoQ to Rs. 28,590 million, surpassing market expectations of Rs. 27,960 million. Domestic revenue grew by 14.7%, driven by new launches in chronic therapies like anti-diabetic treatments. The company focuses on expanding its market share in chronic therapies and improving productivity. Brazil saw a modest 3.2% annual growth, boosted by new products and top brands, while German sales grew by 10.1% due to winning more tenders. The US business declined by 11.6% after adjusting for one-off income in Q1FY24. EBITDA rose 14.3% YoY and 2.4% QoQ to Rs. 9,040 million, with a margin of 31.6%. Profit after tax was Rs. 4,570 million, up 20.9% YoY and 1.8% QoQ, with a PAT margin of 16.0%. The company expects its Indian business to keep outperforming market growth, with chronic business growth at 14% YoY compared to the market’s 8% YoY growth.
Key Concall Highlights
Indian Business Outlook:
- Domestic revenue grew 15% in Q1FY25, outpacing the market’s 8.5% growth.
- Growth drivers: 4% from new products, 2.5% from volume, and the rest from price increases.
- Focus areas: improving chronic market share, new launches, field force productivity, and scaling consumer healthcare.
Medical Representatives:
- Plan to add 300-400 MRs annually.
- Increase from 5,700 MRs in FY24 to 6,000 in FY25.
- Field force expansion and productivity gains to support early-teens domestic growth.
Licensing Agreement:
- Entered a non-exclusive licensing agreement with Takeda, commercialising Vonoprazan.
- Third licensing deal in recent quarters.
- Expect good sales of Vonoprazan despite competition.
Brazilian Business Outlook:
- Moderate growth in Q1FY25 due to floods; expect performance to improve in Q2FY25.
- 19 molecules awaiting approval, planning 6-8 new product launches annually.
German Business Outlook:
- Stable recovery driven by new tender wins in recent quarters.
- Expect incremental sales from tender wins in Q2FY25 due to cost optimization.
- Continued steady pace of new product launches.
US Business Outlook:
- US revenue growth impacted by lack of new product launches; recent approvals were for site transfers.
- Indrad plant under OAI, response sent to USFDA, expecting classification by Oct ’24.
- Plan to launch 5-10 products during the year.
Tax Rate:
- Expect a 30% tax rate in FY25.
- Plan to shift to a new tax regime by FY26, lowering the tax rate to 26-27%.
Valuation and Outlook
Torrent Pharma saw strong revenue growth this quarter, mainly due to new product launches, field force expansion in core therapies, and growth in the consumer division, which makes up about 57% of sales. The company expects domestic growth to continue outperforming the market by focusing on increasing market share in chronic therapies, launching new products, and improving field force productivity. The Tedibar franchise and Curatio portfolio are expected to perform well with expanding margins. The Brazilian business, which is about 7% of sales, had slow growth due to floods and currency issues, Torrent plans to launch 3-5 new brands there. Germany’s business, about 10% of sales, is growing steadily due to new tender wins, which will boost sales in Q2FY25. US business, about 9% of sales, will benefit from more drug approvals, increasing revenue and profitability. The company aims to grow in the domestic, Brazilian, and other markets, add more medical representatives, and expand into the consumer wellness business, focusing on branded generics and profitable growth in Germany and the US.
