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“BUY” This Large Cap Pharma Stock With A Target Price of Rs. 3,620: Sharekhan

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Today when pharma stocks on Dalal Street stayed positive, brokerage company Sharekhan Limited is bullish on Torrent Pharmaceuticals Limited's shares, with a target price of Rs. 3,620. The stock was trading at a market price of Rs. 3,115 at the time of the brokerage's buy call, and it is presently trading at a market price of Rs. 3,079.20 per share on the NSE.

 

The brokerage’s take on Torrent Pharmaceuticals Ltd
 

The brokerage’s take on Torrent Pharmaceuticals Ltd

According to Sharekhan "Torrent Pharmaceuticals Limited's (Torrent's) India business is well placed to grow strongly and outpace the Indian Pharmaceutical Market's (IPM's) growth, backed by expected traction in recently entered trade generics business, presence in high-growth therapies. Further, plans to expand the product portfolio in existing therapies and foray into newer therapies would drive Torrents Brazil revenues and outperform Brazil's market's growth, where it has a sizeable presence. However, delayed plant approvals and heightened competition would drag down US sales growth, which constitutes ~13% of H1FY22 sales. Overall, strong growth prospects across the India and Brazil business are the key growth drivers."

The research report of the brokerage has stated that "Torrent's India business largely comprises the domestic formulations business which grew by 14% y-o-y for H1FY2022. Going ahead, a slew of triggers is expected to drive performance of India business, which includes expected strong traction from the recently entered trade generics segment (Torrent expects sales from trade generics to reach 4-5% of India sales from ~2% now), presence in high-growth therapy areas in the acute segment and strong performance of the top brands. On this basis, Torrent looks to outpace IPM growth."

Sharekhan has also claimed that " Torrent has a sizeable presence in Brazil markets and is present in the branded generics as well as generics segments. Torrent is looking to expand its portfolio in the core therapeutic areas of cardiovascular, Diabetes, and CNS, enter new therapy areas and expand generics business. Consequently, it expects the momentum to pick up in Brazil, and in line with this has reported a 15% y-o-y growth in H1FY22 as compared to a 12% decline in FY2021, which points at a marked improvement."

Accordion to the brokerage's research report "Torrent's US business has been under severe stress as two of its key plants catering to the US markets - Dahej and Indrad - have been under the scrutiny of the USFDA. This affected the base business and product launches. Going ahead, the management expects high competitive intensity in the near to medium term, leading to double-digit price erosion, which could sustain ahead as well. Therefore, delayed plant approvals slowing new launch momentum and high competitive intensity could drag down US sales growth."

Buy Torrent Pharmaceuticals Wih A Target Price of Rs. 3,620

Buy Torrent Pharmaceuticals Wih A Target Price of Rs. 3,620

Based on the bullish face of the brokerage on the stock "Torrent sees a strong outlook for India business, backed by expanding reach, presence in high-growth therapies and likely traction in new trade generics division. Expected healthy growth in the existing portfolio, likely outperformance to the industry, and new product launches would drive Brazilian sales growth, while US business, constituting 13% of overall H1FY22 sales is expected to be under stress. At the CMP, the stock is trading at 39.1x/30.7x its FY2022E/FY2023E EPS. Based on strong performance from India and Brazil business, we retain our Buy recommendation on the stock with a revised PT of Rs. 3,620."

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Sharekhan Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Story first published: Friday, December 10, 2021, 16:07 [IST]
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