Torrent Pharma Shares Dip, JB Chemicals Sinks 7% Post Rs 11,917 Cr Deal Announcement; Here’s What Analysts Say

On Monday, shares of Torrent Pharmaceuticals Ltd opened on a strong note at Rs 3,416.00, up nearly 4% from the previous close, reaching an intraday high of Rs 3,474.60 on the Bombay Stock Exchange (BSE) on Monday, after the company announced a significant acquisition deal. Meanwhile, shares of J.B. Chemicals and Pharmaceuticals fell almost 7% as investors reacted to the acquisition terms.

Torrent has entered into a definitive agreement to acquire a controlling stake in J.B. Chemicals & Pharmaceuticals Ltd, in a transaction valued at Rs 11,917 crore, marking one of its largest-ever acquisitions.

Torrent Pharma Share Price Today

As of 10:00 AM on June 30, shares of Torrent Pharmaceuticals Ltd (NSE: TORNTPHARM) were trading at Rs 3,351.50, marking a modest increase of Rs 10.10 or 0.30% for the day.

The stock climbed to an intraday high of Rs 3,478.90, while the low so far has been Rs 3,342.00. Over the past 52 weeks, Torrent Pharma has seen a high of Rs 3,590.70 and a low of Rs 2,757.90, reflecting strong investor interest and significant price movement within the year.

J.B. Chemicals Share Price Today

On June 30, shares of J.B. Chemicals and Pharmaceuticals Ltd (NSE: JBCHEPHARM) came under pressure following the announcement of its acquisition by Torrent Pharmaceuticals. The stock opened at Rs 1,705.00, matching its intraday high, but soon declined as the session progressed, hitting a low of Rs 1,673.00. By 10:14 AM, the stock was trading at Rs 1,685.90, down Rs 115.50 or 6.41% from the previous close.

The decline comes as investors digested the terms of the acquisition deal, which includes Torrent purchasing a controlling stake at Rs 1,600 per share from the promoter and offering Rs 1,639.18 per share in an open offer to public shareholders, both below recent market levels.

Over the past 52 weeks, J.B. Chemicals has traded between Rs 1,385.75 and Rs 2,030.00, making today's move a notable pullback from its recent highs.

Details of Torrent Pharma's Acquisition Structure

In a board meeting held on Sunday, Torrent Pharma approved a multi-stage acquisition plan to acquire majority ownership of JB Chemicals. The pharmaceutical company will acquire approximately 7.44 crore equity shares, representing 46.39% of JB Chemicals' fully diluted equity share capital.

These shares will be purchased from Tau Investment Holdings Pte Ltd, the promoter entity, at a price of Rs 1,600 per share, aggregating to Rs 11,917 crore. This purchase is contingent on receiving statutory and shareholder approvals, including clearance from the Competition Commission of India (CCI).

As an extension to the SPA, Torrent Pharma may acquire up to 44.99 lakh equity shares (or 2.80%) from certain employees of JB Chemicals. These would be transacted at a price not exceeding Rs 1,600 per share, potentially through the exercise of employee stock options.

In line with SEBI's Takeover Regulations, Torrent Pharma has also made a mandatory open offer to acquire up to 4.17 crore shares (approximately 26.00%) of JB Chemicals' expanded share capital. The offer price has been set at Rs 1,639.18 per share, offering public shareholders a premium over the negotiated price with promoters.

Following the successful completion of these steps, Torrent Pharmaceuticals will become the promoter and controlling shareholder of JB Chemicals. This acquisition is expected to enhance Torrent's product portfolio, improve operational synergies, and broaden its presence both domestically and internationally.

Analyst Reactions on Torrent Pharma Stock: Should You Buy? Check Nomura and HSBC Share Outlook

Nomura Rating on Torrent Pharma Share

Brokerage firm Nomura has maintained a 'Neutral' rating on Torrent Pharmaceuticals, setting a target price of Rs 3,580 implying a potential upside of 7% from the stock's previous close. While acknowledging the attractiveness of near-term cost synergies and potential long-term revenue benefits, Nomura highlighted the unprecedented size of the deal relative to Torrent's historical acquisitions. However, the brokerage remains cautiously optimistic due to Torrent's proven track record and disciplined M&A strategy.

HSBC Rating on Torrent Pharma Stock

In contrast, HSBC has reiterated its 'Buy' rating on Torrent Pharma, viewing the acquisition as strategically sound. The firm believes the deal will strengthen Torrent's presence in chronic therapies within India and enhance its capabilities in international CDMO (Contract Development and Manufacturing Organization) operations.

HSBC did caution about potential near-term pressure on earnings, citing higher interest expenses and amortisation costs, but overall sees the acquisition as a growth-enabling move in the long term.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.