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Sector Outlook: Positive
Steady performance continues across key markets
Torrent Pharma reported revenue growth of 8.6% YoY (1% QoQ) to ₹28,890 mn, exceeding expectations. Domestic revenue rose 13% YoY, led by strong chronic therapy performance, with the chronic segment up 14% YoY against IPM growth of 9%, driven by a revival in cardiac therapies. Brazil saw a modest 4.4% growth, while German sales increased by 8.3%, supported by recent tender wins. The US market also grew 8.1%. EBITDA grew 13.8% YoY to ₹9,390 mn, with margins improving to 32.5%. Profit after Tax rose 17.4% YoY to ₹4,530 mn, and PAT margin improved to 15.7% from 14.5%.
Key Concall Highlights
Indian Business Outlook:
Domestic revenue grew due to outperformance in focus therapies. As per AIOCD secondary data for Q2FY25, Torrent’s growth was 13% vs. the IPM growth of 8%, aided by 3% from new product launches, 1% from volume, and the rest from price increases. We expect India’s business to outperform the IPM in the upcoming quarters. The focus during the year will be on improving chronic market share, new launch performance, field force productivity of the expanded divisions, and continuing scale up of the consumer health business.
Field Force expansion:
The field force expanded to 6,000 from 5,700 in the previous quarter. The company will look to add another 100-200 MRs annually. Torrent Pharma now has 21 brands in the top 500 of the IPM, with 13 brands achieving sales of over Rs. 1,000 mn as of March 2024.
Insulin Facility:
The insulin facility underwent a temporary shutdown in August for maintenance, with manufacturing set to resume in December. The company expects Q4 to recover the revenue shortfall.
Volume:
The company’s volume growth has been driven by its higher reach, more divisions, and higher doctor coverage. However, the company is not adequately present in some non-metro towns, where there is scope for expansion.
Brazilian Business Outlook:
Brazil saw moderate growth in Q2FY25, aided by the performance of top brands, new launches and growth in the generic segment. The company plans to launch at least one to two products annually for each division, including the CNS and CMT teams in Brazil, and at least five products per year for the generics division.
German Business Outlook:
Since the last few quarters, Germany has witnessed a stable sequential recovery, driven by new tender wins. The company expects benefits from incremental tender wins to start delivering incremental sales in Q1FY26.
US Business Outlook:
The company does not expect any meaningful ramp-up in the US over the next two years. It also expects at least mid-single-digit launches in the US from Indrad over the next 12 months. As we advance, Torrent Pharma intends to turn the US business into a profitable business over the next three years.
Valuation and Outlook
Torrent Pharma achieved strong revenue growth this quarter, driven by a 56% sales contribution from its domestic market, supported by new launches, field force expansion in core therapies, and growth in consumer health. The company remains focused on gaining market share in chronic therapies and improving field force productivity. Curatio’s portfolio also added substantial margin expansion. The Brazilian market (9% of sales) grew steadily with top brands and generics, and Torrent anticipates new launches and industry price hikes there. In Germany (10% of sales), revenue surged with new tenders set to boost Q1FY26 sales. Torrent expects growth in the US market (9% of sales) through increased drug approvals, enhancing US generics profitability. Future growth is expected from a strong presence in branded generics across domestic, Brazilian, and ROW markets, expansion into consumer wellness, and a deepening footprint in branded generics in Germany and the US, aiming for profitability within three years.