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Result Synopsis

Torrent reported an in-line quarter with domestic growth better than expected which was set on monthly data; indeed, management indicated market growth of 7-8% vs 4% estimate. Curatio continues to progress on margin as it catches up to overall Torrent profitability, India business growth outlook remains strong in H2 even as delayed pick up in gastro may have beneficial impact in Q3. Brazil sales recouped most of the lost sales in Q1 and company continues to guide for sustained performance on back of MR addition (completed) and new product introduction over next one year. US outlook can improve after clearance of Dahej as Torrent awaits fresh approvals while Indrad would need reinspection. Overall, reckon Torrent is better placed as growth and margin prognosis much more sanguine than acute players who may have to endure a weak season. We raise domestic growth assumption by 150bps to 15% for the year and also increase interest expenses on back of H1 reported numbers; albeit, this results in a marginal ~1% change to FY25 EPS. Retain ADD with revised TP Rs2,070 (earlier Rs2,100) and believe Torrent offers modest upside with high degree of earnings certainty.

Result Highlights

* In-line quarter with sales up 16% YoY driven by strong branded growth of 18% YoY

* India sales up 18% along with 17% rise in Curatio brands; ex-Curatio, growth up 12% YoY

* Brazil revenues improved QoQ as there was delayed sales impact in Q1 which was recouped during the quarter

* Adjusted US business declined 13% YoY impacted by loss of low margin business and lack of new launches

* Margin in line at 31% as branded mix improves QoQ

* PAT up 24% YoY driven by operating leverage on back of healthy topline growth

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