Torrent Pharma’s June quarter performance in line with expectations

 EBITDA grew 13% YoY (in line with our/consensus estimates), with 11% YoY sales growth, led by 11% YoY growth in India, and 19% YoY growth in the US markets, steady gross margin, and moderate cost inflation.

The company expects: (1) India to outperform IPM growth, driven by price increases, steady volumes, and new launches in focused therapies. The focus is to improve field force productivity with new divisions for launches and expand market reach. It plans to add 500–600 MRs across its focused chronic therapies (MR count at 6,600 as of Jun’25) in a phased manner; the consumer brands (10-15% of sales) will sustain strong momentum; (2) steady growth in Brazil, led by traction in key brands and new launches; (3) Germany business to remain soft in FY26 due to supplies constraint from its outsourced partnered (~75% of Germany business depends on third-party supplies); (4) steady scale-up in the US in FY26 with a focus on improving profitability over the next few quarters; planning 10+ launches in FY26 (4-5 in Q1FY26); (5) to sustain/improve the EBITDA margin at/from 32.9% (adjusted margin for Q1FY26) in FY26 despite step-up in R&D spend; and (6) ETR at 25-26% in FY26.

It is looking to launch GLP-1 molecules on patent expiry in India (both OSD and injectable) and Brazil. We believe Torrent Pharma is well-poised for steady growth, led by a strong branded franchise (new launches, consumer wellness, traction in Brazil—new launches in chronic) and gradual turnaround in US generics (profitability improvement and new launches) and Germany (tender wins), with margins steady around 32-34% over the next few years. We have slightly tweaked our EPS estimates for FY26/27E and revised the TP to INR 3,780 (40x Q1FY28E EPS; implying EV/ EBITDA of 25x). Maintain ADD.

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Source: HDFC Securities Institutional Equities

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