(CMP: Rs. 2654; MCap: Rs. 44919 crore)

Torrent Pharma’s Q2FY21 revenues were in line with I-direct estimates whereas profitability was higher due better than expected EBITDA margins and lower than expected interest expense and tax rate.

Q2FY21 Earnings Summary

– Revenues remained flattish, growing a mere 0.6% YoY to Rs. 2017 crore (I-direct estimate: Rs. 2086 crore) mainly due to 13.9% YoY decline in US formulations to Rs. 327 crore (I-direct estimate: Rs. 342 crore). Domestic sales grew 7.1% YoY to Rs. 963 crore (I-direct estimate: Rs. 944 crore). Brazil de-grew 17.3% YoY to Rs. 129 crore (I-direct estimate: Rs. 137 crore). Germany business grew 4.4% YoY to Rs. 261 crore (I-direct estimate: Rs. 262 crore)

– EBITDA margins expanded 450 bps YoY to 31.5% (I-direct estimate: 30.0%) mainly due to lower other expenses amid likely lower travel and promotional spends due to Covid-19. Subsequently, EBITDA grew 17.4% YoY to Rs. 635 crore (I-Direct estimate: Rs. 626 crore)

– Net profit grew 27.0% YoY to Rs. 310 crore (I-direct estimate: Rs. 291 crore) in line with operational performance. Delta vis–vis EBITDA was mainly due to lower interest cost partially offset by lower other income

Torrent continues to impress thanks to its robust margin profile, which can be attributed to a global portfolio that comprises ~60% branded generics. The company’s portfolio is finely balanced between India, Brazil, Germany and the US with India the leader. With consistent FCF generation and moderation in core capex, we expect the leverage situation to improve substantially.

We would be revisiting our estimates and coming out with a detailed update post the conference call.

Shares of TORRENT PHARMACEUTICALS LTD. was last trading in BSE at Rs.2654.45 as compared to the previous close of Rs. 2734.35. The total number of shares traded during the day was 23676 in over 2381 trades.

The stock hit an intraday high of Rs. 2773.85 and intraday low of 2644. The net turnover during the day was Rs. 63804283.

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