Buy Torrent Pharmaceuticals Ltd For Target Rs. 5,000 by Prabhudas Liladhar Capital Ltd
Strong India performance
Torrent Pharma’s (TRP) reported steady quarter with base business Q4FY26 EBITDA growth of 16% YoY, in line with our estimates. The strong headstart in Sema franchise will continue TRP to achieve higher growth in domestic formulation. The acquisition of JB Chemicals & Pharma (JBCP) appears strategically compelling, making it the 5th largest player in the domestic pharma market. This will further be strengthening its position in high-margin chronic therapies and opens up many newer therapeutic areas. The deal also adds JBCP’s CDMO vertical, offering diversification and growth optionality. The cost synergies guidance of Rs4-4.5bn deal is positive and expect combined entity EBIDTA to be at Rs77-78bn in FY28. TRP trades at 23.5x EV/EBITDA on FY28E for the combined business. We maintain “BUY” rating with revised TP of Rs5,000/share, valuing at 26x EV/EBITDA on FY28E for combined entity.
Strong base business growth YoY:
TRP’s Q4 consolidated nos include JBCP. The base business revenues grew by 16% YoY. Domestic base business growth was at 15% YoY. Semaglutide launch saw strong initial traction, achieving ~38% combined oral + injectable market share in April’26 as per PharmaTrac data. US base business revenue grew by 9% YoY. Brazil market was up 30% YoY. CC growth was strong at 11% YoY. Germany delivered growth of 16% YoY. In CC it was down 1% YoY due to supply disruption.
EBIDTA in line:
Base business GMs improved 220bps YoY at 77.5%. Base business EBITDA stood at INR 11.2bn (up 16% YoY), in line with our estimate. Other income came in negative to the tune of INR 300mn. Tax rate was higher ~27%. Base business PAT stood at INR 5.7bn (up 14% YoY)
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