Sector Outlook: Positive
Strong performance across all focused markets
Torrent Pharma reported a revenue growth of 10.2% YoY and 0.5% QoQ, reaching Rs. 27,450 million, surpassing market expectations. Domestic revenue increased by 9.8% YoY, driven by new launches in chronic therapies, especially anti-diabetics, and strong performance in core therapies. Brazil saw a 17.0% growth due to new product launches and top brands, while German sales grew 10.7% with tender wins. However, the US business declined by 6.4% due to fewer new launches. EBITDA rose 21.5% YoY and 1.6% QoQ to Rs. 8,830 million, with a margin of 32.2%. PAT increased 56.4% YoY and 1.84% QoQ to Rs. 4,490 million. The company has 20 brands in the top 500 of the Indian Pharmaceutical Market (IPM), with 17 brands exceeding Rs. 100 crore in sales. Torrent expects its Indian business to continue outperforming market growth, with chronic business growth at 14% YoY compared to IPM’s 12% YoY.
Key Concall Highlights
Indian Business Outlook:
- Torrent Pharma’s domestic revenue grew due to strong performance from new launches.
- According to AIOCD data for Q4FY24, Torrent’s growth was 14%, compared to the Indian Pharmaceutical Market (IPM) growth of 12%.
- Growth was driven by 4% from new product launches, 3% from volume increases, and the rest from price hikes.
- Torrent expects its Indian business to continue outperforming the IPM in the coming quarters.
- The focus for the rest of the year will be on increasing market share in key therapies, successful new launches, and improving productivity of the expanded field force divisions.
Trade Generics:
- The trade generics segment performed well in FY24, achieving over 20% YoY growth.
- Profitability in this segment exceeded earlier expectations.
- The company has no plans to move its trade generics business into a separate subsidiary.
Medical Representatives:
- The company plans to expand by 300-400 MRs every year. Thus, we expect MR to increase from 5,700 in FY24 to 6,000 in FY25
Shelcal Brand:
- Torrent Pharma’s brand Shelcal 500 continues to grow robustly across all states and regions where it has invested in advertising and OTC marketing.
Brazilian Business Outlook:
- Brazil witnessed strong market growth, and sales grew 17% YoY in Q4FY24, led by new launch momentum and a robust pricing environment.
- The company plans to launch 4-6 new products in Brazil annually.
German Business Outlook:
- Germany has seen stable recovery in recent quarters due to new tender wins and better conversion of existing tenders.
- The company expects additional tender wins in Q4FY24 to start boosting sales in Q2FY25.
- These wins are a result of cost optimization efforts to stay competitive in tender bids.
- New product launches in Germany continue at a steady pace.
US Business Outlook:
- A lack of new launches impacted growth in the US business. However, the company expects eight on-time approvals in FY25, with 3-4 products anticipated to substantially affect the topline.
Branded Generics Market:
- In Q4FY24, Torrent Pharma saw strong performance in branded generics markets due to new product launches and entry into new therapies.
- The branded generics market now makes up about 73% of total sales and continues to grow.
- The company plans to maintain a strategy of launching three to five new branded products annually.
Valuation and Outlook
Torrent Pharma Ltd. reported strong revenue growth in Q4FY24, driven by its domestic business, which makes up about 50% of total sales. This growth was due to new product launches, expanding the field force in core therapies, and gains in the consumer division. The company expects this domestic growth to continue, focusing on chronic therapies, new launches, and improving field force productivity. The Brazilian market, accounting for 14% of sales, saw robust growth from new launches and volume increases. In Germany, which makes up 10% of sales, revenue increased due to tender wins and better tender conversion, with further growth expected in Q2FY25. The US business, also 10% of sales, struggled due to low margins and fewer new launches but is expected to become profitable in 2-3 years. Overall, Torrent Pharma plans to deepen its presence in branded generics and expand in Germany and the US.
