Buy Torrent Pharma; target of Rs 1385: Kotak Securities

Written By Unknown on Kamis, 05 Februari 2015 | 20.07

Kotak Securities is bullish on Torrent Pharmaceuticals and has recommended buy rating on the stock with a target price of Rs 1385, in its research report dated January 30, 2015.

Kotak Securities' report on Torrent Pharmaceuticals

"Torrent results were below expectations due to higher other expenses. Torrent posted revenues of Rs 11.5bn, up 17% YoY. Domestic formulations revenues at Rs 4,200 mn were up 42% led by Elder acquisition, adjusted for the same, domestic form segment posted 15% growth. Elder acquired brands posted revenues of ~Rs 800mn compared to Rs 945mn in 2QFY15. US revenues were up 16% YoY at Rs 1,717 mn. EBIDTA margins at 20.5% dipped 190/260 bps QoQ/YoY led by higher other expenses. We expected margins of ~22%. PAT at Rs 1.67bn, was up 6% YoY."

"The stock has corrected significantly on weak margins as well as indication of raising funds. Though management has cited that fund raising limits are increased as an enabling resolution, the skepticism of large acquisition will remain an overhang on the stock. On the business front we remain buoyant on company's growth perspective as well improving profitability."

"Management expects Elder's portfolio to post higher revenues in coming quarters led by price increase taken in Dec-14. Moreover, the launches lined up for US markets will keep the momentum strong not only in revenues but also the profitability. We maintain our positive stance on Torrent Pharma
with a BUY rating, TP of Rs 1,385", says Kotak Securities research report.

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To read the full report click here


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