IGI Logo

Torrent Pharma (TRP) reported a strong Q1FY27 performance, with the base business EBITDA growing 20% YoY, ahead of our estimates, driven by robust execution and continued momentum in the domestic franchise. While a temporary supply disruption impacted injectable semaglutide, management expects market share to recover following normalization of supplies. The integration of JB Chemicals & Pharma (JBCP) is progressing ahead of schedule, with cost synergies already exceeding initial expectations and revenue synergies likely to accrue from FY28. The acquisition strengthens Torrent's leadership in high-margin chronic therapies, expands its presence across multiple therapeutic segments, and positions the company as the 5th largest player in the Indian pharmaceutical market. Additionally, JBCP's CDMO business enhances portfolio diversification and provides an incremental long-term growth avenue.

We expect company to achieve higher cost synergies of earlier guidance of Rs4-4.5bn deal and expect combined entity EBIDTA to be at Rs78-80bn in FY28E. TRP trades at 25.5x EV/EBITDA on FY28E for the combined business. We maintain “BUY” rating with revised TP of Rs5,500/share, valuing at 28x EV/EBITDA on FY28E for combined entity.

Higher growth from base business YoY: TRP’s revenue growth was at 55% YoY to INR 49bn. Segment wise domestic business grew by 60% YoY. Base business ex JBCP revenues grew by 19% YoY. US base business including JBCP came in at USD44Mn. Brazil market was up 27% YoY. CC growth was mere 3% due to one-time channel inventory reduction taken by company. Germany delivered growth was of 3% YoY. The same was impacted by supply disruption and lower tender. JBCP CDMO business was up by 27% YoY.

EBIDTA beat estimates: GMs improved 60bps YoY at 75.9%. The GM improvement was aided by price increase in India business, better product mix and forex gain. EBITDA increased 61% YoY to INR 16.6bn, 5% above our estimates. OPM stood at 33.8% up 150bps QoQ and 130bps YoY. Other income came in negative to the tune of INR 120mn led by forex loss. Depreciation and interest charges were higher led by JBCP consolidation. Tax rate stood at ~22%. Resultant PAT stood at INR 5.9bn (up 7% YoY); largely in line with our estimate

Conference Call Highlights

• India: Growth drivers: Volume 5.1%, Price 7.7%, New products 6%. The company continued to outperform in chronic and sub-chronic therapies. Combined field force stood at 9400 in Q1FY27. PCPM INR 1mn.

• Curatio: Business grew by 34% YoY during the quarter. Growth was driven by strong OTC demand, increasing advertising spend and expansion of the field force.

• Semaglutide: Q1FY27 sales reached INR 500mn. Captured 36% combined market share (oral + injectable) in Q1FY27. Alternate supplier has been secured for temporary partner supply disruption. Temporary disruption impacts around 20% of monthly semaglutide revenues. Semaglutide filing remains under ANVISA review, with management expecting approval in months.

• Brazil: Constant-currency sales grew 3%, impacted by a one-time channel inventory reduction due to distributor requests for longer credit periods. Generic business now contributes 22% of Brazil revenues. Management expects mid-teen growth to resume from Q2 as channel inventories normalize.

• Germany: Supply disruption at third-party supplier which impacted sales; visibility remains unclear. Around 10–15% of Germany revenues have been impacted by supplier issues. Aggressive tender competition continues to pressure market share despite ongoing cost optimization efforts.

• US markets: Growth supported by new launches and increased market share in existing products. Management expects the US business to become profitable during FY27, marking a turnaround after several years of losses.

• JBCP integration & synergies: JB field-force attrition declined to 16% from ~30% before acquisition. Cost synergy realization is ahead of plan, with FY27 synergy benefits expected to exceed the earlier INR 900mn target and cross INR 1bn. Brand transfers and sales-force integration may cause temporary revenue disruptions over the next 2–3 quarters, but no material EBITDA impact is expected.

• Other: Net debt stood at ~INR 223bn following the JB Pharma acquisition. Net debt/EBITDA stands at 2.1x

Please refer disclaimer at Report
SEBI Registration number is INH000000933