Torrent Pharma Stock Falls As U.S. Business Drags In Q3
Torrent Pharma is the top laggard on the Nifty Next 50 Index.
Shares of Torrent Pharmaceuticals Ltd. fell the most since December as sales declined in the drugmaker’s second-biggest market.
The company’s revenue in the quarter ended December remained flat at Rs 1,995 crore over the year-ago period, according to an exchange filing. That compares with the Rs 2,060.4-crore consensus estimate of analysts tracked by Bloomberg.
The drag in overall top line came on the back of a 24% decline in sales in the U.S., owing to price erosion and base impact of the sartan portfolio discontinuation.
The U.S. business, according to the drugmaker’s FY20 annual report, contributed 19% to its overall sales.
Sales in India, Torrent Pharma’s largest market, rose 7% year-on-year to Rs 930 crore. The company in its conference call said India and Germany are on the recovery path, while the Brazil division offered a positive surprise.
“The U.S. continues to be a major overhang on growth due to multiple headwinds encompassing price erosion, sartan discontinuation and absence of new launches amid pending regulatory U.S. FDA re-inspections in Indrad/Dahej,” Ambit Capital said in a note. “We are now building in 10%/11% top line growth in FY22-23 due to domestic growth reversal, quality management issues resolving in Germany and higher-than-expected growth witnessed in Brazil.”
The brokerage, however, maintained its ‘sell’ rating on the stock, given peak margin and limited possibilities of earnings upgrades.
Other highlights (year-on-year)
- Net profit rose 18% to Rs 297 crore, against the estimated Rs 292.1 crore.
- Operating profit rose 12% to Rs 607 crore. Analysts had pegged the Ebitda at Rs 617.1 crore.
- Margin expanded to 30.4% from 27.5%.
Shares of Torrent Pharma fell as much as 6.8% as of 10:30 a.m. on Tuesday to Rs 2,569 apiece. The stock has snapped a five-day gaining streak, and is the top laggard on the Nifty Next 50.
Of the 35 analysts tracking the company, 16 have a ‘buy’ rating, 10 suggest a ‘hold’ and nine recommend a ‘sell’. The average of Bloomberg consensus 12-month price target implies an upside of 10.1%.