IGI Logo

Strong show priced in

Torrent Pharmaceuticals (TRP IN) reported strong Q4FY26, with revenue and EBITDA coming 2% and 7% ahead of our estimates , respectively . The acquisition of controlling stake of 48.8% in JB Chemicals & Pharmaceuticals (JB CP ) was completed on 21 Jan uary 20 26, with line -by -line consolidation effective from Q4FY26. Management expects INR 4 .0– 4.5bn cost synergies in the next 2– 3 years (~20% in one year). Consolidation of JBCP bolstered growth, but even the base business growth remained strong. We lower our FY2 7E and FY2 8E core EPS by ~10% each , as we build in higher amortization cost tha n we had anticipated from JB CP acquisition . After the recent strong stock price performance, we see limited upside; hence, we downgrade to Reduce from Accumulate with a higher TP of INR 4, 516. India outperforms IPM: India revenue grew 14% YoY, ahead of IPM growth , driven by strong chronic performance and volume -led growth. Cardiac, gastro and diabetes led therapy momentum while Curatio sustained robust growth. Field force expansion continues, and we expect India to sustain market outperformance, supported by chronic portfolio scale -up and productivity gains.

JB Pharma acquisition to drive margin and EPS accretion:

T RP has acquired a 48.8% controlling stake in JB Pharma , with consolidation effective from Q4FY26. Management has guided for cost synergies over the next 2 – 3 years, with ~20% likely in Year 1 ; these are entirely cost -led, with revenue synergies yet to be assessed. JB Pharma operates at a lower margin than TRP, offering scope for improvement post integration. With a 15 -year amortization policy and strong cash generation, we expect leverage to d ecline steadily in the next few years

Brazil robust; Germany soft; US revival underway:

Brazil delivered strong branded momentum with healthy double -digit growth and continued outperformance vs the market. Semaglutide filings are under priority review at ANVISA and remain a key medium -term trigger, although competition could lead to pricing p ressure. The pipeline remains robust with multiple molecules under review. We expect TRP’s LatAm business to be a steady 10+% compounder. In Germany, performance continues to be impacted due to third -party supply disruption, with alternate sourcing likely to take a few quarters. The US business grew exceptional at 24% YoY in USD , supported by recent launches and better traction in seasonal products. M anagement targets to sustain single -digit percent growth in this business

Downgrade to Reduce with a higher TP of INR 4,516:

We lower our FY27E and FY28E core EPS by ~10% each, as we build in higher amortization cost than we had anticipated from the JBCP acquisition ; we introduce our FY29 numbers. TRP currently trades at 79x FY27E core P/E. After the recent strong stock price performance, we see limited upside . Hence, we downgrade to Reduce from Accumulate and raise our target price to INR 4, 516 from INR 4,351 on 61x FY28E core P/E plus cash per share. Sizeable upside from semaglutide in the large markets and rapid synergy benefits from JB Pharma integration are key upside risks.

Please refer disclaimer at Report
SEBI Registration number is INH000000933