“Unlike peers, Torrent Pharma
guided for a relatively moderate outlook across geographies, owing to lack of new approvals in the US, supply issues in Germany (to sort by H1 end) and weak FY21 economic outlook in Brazil,” analysts at Emkay Global Financial Services said in result update.
The brokerage firm believes that pricing-led growth is unlikely to sustain in the long run and believe any slowdown in India sales would have a cascading impact on the company’s premium multiples.
While India growth should outpace the industry in the near term as demand for chronic drugs recovers from Q2 onwards, the brokerage firm concerns remain on the dwindling volumes in key products even before Covid-19 struck. The company’s premium valuation multiples are highly sensitive to India growth, and we see scope for disappointment here, it added.
Though the company remains confident of outperforming Indian pharmaceutical market growth, analysts at Dolat Capital remain wary of the exports (US – 2 key facilities under warning letter (WL) and official action indicated (OAI), Brazil – adverse currency and batch traceability regulations in Germany) given the weaker outlook.
Further, as per the management, growth sustenance without any newer approvals would be challenging in the US. We believe growth levers from India business has been captured largely and margins have peaked for Torrent. The focus will now shift to growth and balance sheet de-leveraging amidst a challenging environment, the brokerage firm said in result update.
At 11:43 am, Torrent Pharma
was down 4 per cent at Rs 2,475 on the BSE, as compared to a 0.70 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 1.35 million shares changing hands on the NSE and BSE.