Torrent Pharma Net Up 8 Per Cent
Shrikant / 27 Jan 2012
Torrent Pharma, a leading pharma company from Ahmedabad, announced its Q3 results on Monday, January 23, 2011 and later conducted a conference call.
On a consolidated basis its topline grew by 22 per cent to Rs 688.53 crore while its bottomline grew modestly by 8 per cent in the third quarter of this fiscal. Its EBITDA margins, which stood at 17.44 per cent, have taken a beating of 247 basis points on a YOY basis. Its other expenses, which include power and fuel costs, rose sharply by 30 per cent. The employee cost grew by 22 per cent which is in line with the sales growth. The interest payments reduced sharply from Rs 3.45 crore to Rs 15 lakhs in this quarter as the company repaid the rupee loans in the last nine months. Its other income increased from Rs 1.82 crore in Q3FY11 to Rs 2.34 crore in Q3FY12.
The tax rate has remained at about 20 per cent which was in line with the corresponding quarter last fiscal. Its total debt as per the half yearly statement has increased from Rs 511 crore (H1FY11) to Rs 581 crore (H1FY12). On a standalone basis the company has reported 14 per cent rise in topline while its bottomline shrunk by 7 per cent. Its EBITDA margins have contracted by 409 basis points to 17.21 per cent which is due to the increase in the costs of traded goods such as tablets, capsules, injections, vials, etc.
|
|
Particulars |
Q3FY12 |
Q3FY11 |
Growth |
|---|---|---|---|---|
|
A |
Sales in India |
|
|
|
|
|
Branded Business |
230.21 |
213.79 |
7.7% |
|
|
Contract Manufacturing |
60.87 |
59.38 |
2.5% |
|
|
Others |
1.39 |
0.39 |
256.4% |
|
|
Total (India) |
292.47 |
273.56 |
6.9% |
|
B |
Sales outside India |
396.06 |
291.55 |
35.85% |
|
C |
Total sales |
688.53 |
565.11 |
21.84% |
The company has reported 7 per cent growth in domestic sales. Its CRAMS business managed to grow by 3 per cent on a YOY basis. The branded business grew by 8 per cent. In the domestic market, the company said that there is higher competition from the small pharma companies. The sales in exports were higher by 36 per cent in this quarter compared to the corresponding quarter last fiscal. In constant currency terms, its US revenues are up by 51 per cent while its Brazil revenues are up by 21 per cent. In Brazil the company expects the growth rate to remain in the range of 15 per cent.
During the quarter the company reported Rs 18 crore as forex loss (operational and mark to market). In the first two quarters of this fiscal it had marginal gains. The company has hedged its next quarter and next half year revenues for any adverse currency fluctuations. Its imports however remain uncovered.
One of the concerns for us is that its growth rates in many therapeutic segments have remained lower than the market growth rates. It is only in the anti-infective segment that its growth rate has outpaced the market rate. The company however has said that it will increase the strength of its marketing professionals from about 2,600 to 3,000 in the next fiscal. The company is also looking to start oncology products but has not specified a time frame for the same.
During the conference call it was further stated that the company’s business in Germany is normal and will secure some tenders soon. Though it operates at lower margins in Germany, it has a higher return on the capital. Torrent Pharma also has very low R&D costs and has about 10-20 manufacturers as product suppliers. Further, it was stated that the process of product approvals has been taking more time in Brazil but the company was confident of launching some more products in the next financial year. In Mexico the company expects growth to be gradual and will launch a new product in the next quarter.
Its pipeline includes a total of 65 ANDAs of which 34 are approved and 18 are commercialised. The company has allocated Rs 200-250 crore for capital expenditure in the next fiscal. Going ahead the commissioning of its Dahej manufacturing facility will be positive for its revenues. The company is also focusing on the regulated markets which will lead to more revenues. It also has a contract with AstraZeneca for generic drugs which is expected to kick off either in FY13 or FY14. This will also be a growth driver for the company. The company imports more than 35 per cent of its total raw materials. We believe that the margins may remain under pressure as the rupee has depreciated. However, that’s the case with other pharma companies as well.
Since Torrent Pharma has been growing at a five-year CAGR of 18 per cent, we believe that it will continue doing so. In our opinion this stock will help as defensive play going ahead and one can start accumulating it to balance the portfolio.
|
Consolidated for the quarter (RS Crore) | |||
|---|---|---|---|
|
Particulars |
Q3FY12 |
Q3FY11 |
Growth |
|
Sales |
688.53 |
565.11 |
22% |
|
Net income |
696.59 |
577.53 |
21% |
|
Depr |
19.7 |
16.13 |
22% |
|
Ebitda |
121.48 |
114.99 |
6% |
|
Margin |
17.44% |
19.91% |
|
|
PBIT |
104.12 |
100.68 |
3% |
|
Interest |
0.15 |
3.45 |
-96% |
|
PBT |
103.97 |
97.23 |
7% |
|
Taxes |
20.06 |
20.32 |
-1% |
|
Net profit |
83.91 |
76.91 |
9% |
|
Minority interest |
0.73 |
0 |
|
|
Net profit After minority interest |
83.18 |
76.91 |
8% |
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