Torrent Pharmaceuticals Ltd. – Strong growth continues across key markets

Sector Outlook – Positive
Torrent Pharmaceuticals Ltd. (TPL) saw its revenue increase by 9.7% this quarter, performing better than expected due to strong sales in India, Brazil, and Germany, driven by new product launches and the success of top brands.
However, US sales dropped due to a lack of new launches. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) and profit after tax (PAT) both saw significant rises, thanks to better gross margins. 
The company’s products are doing well, with 20 brands among India’s top 500, and it leads in the generic Sitagliptin market. Torrent expects continued growth in the Indian market, outpacing the overall market growth.

Concall Highlights

• TPL excels in branded generic markets, leading in sitagliptin sales, with 72% of revenue from branded generics. Plans for 3-5 new products yearly.
• In India, revenue growth from new launches outpaced industry, expecting continued market lead. Focus on expanding market share, launching new products, and field force efficiency.
• Brazil saw a 26% sales increase, with new product launches and strong pricing. Expansion plans include 3-5 new launches and increasing sales teams to boost reach.
• Germany’s recovery due to new tender wins and optimised costs. Incremental sales expected from Q2FY25. Focus on cost efficiency, new launches, and OTC business growth.
• US business faced challenges due to no new launches. Plans for 7-8 new products starting Q1FY25 to improve performance.

Valuation and Outlook
TPL saw strong sales growth this quarter, mainly from its business in India thanks to new products and better consumer health sales. They plan to keep beating market growth with new products and better sales strategies.
In Brazil, new launches and good pricing helped sales. Germany’s sales are up too, thanks to winning more business deals, and they plan to keep this up. The US faced challenges with no new launches, but they are planning new products to boost sales.
Overall, TPL is focusing on growing its profitable branded business and expanding globally.