Torrent Pharma sustains growth as JB Chemicals integration accelerates cost synergies

Investment View and Valuation

ICICI Direct Research retains a BUY recommendation on Torrent Pharma following its July 31, 2026 result update. The view is supported by sustained growth in the company’s branded businesses and expected value creation from the integration of JB Chemicals & Pharmaceuticals (JB Pharma).

ICICI Direct values Torrent Pharma at Rs 5,920 per share, based on 27 times FY28E EBITDA of Rs 7,594.3 crore. The current market price cited in the report is Rs 5,080.

Business Profile and Acquisition Track Record

Torrent Pharma is primarily a branded-generics business, with approximately 75 per cent of sales coming from branded products. Its FY26 revenue mix comprised India at 55 per cent, Brazil at 10 per cent, the US at 10 per cent, Germany at 9 per cent and other markets at 16 per cent.

The company has a history of profitable acquisitions, including Elder Pharma, Unichem and Curatio. ICICI Direct expects another smooth consolidation following Torrent Pharma’s acquisition of a controlling 48.8 per cent stake in JB Pharma.

Q1FY27 Operating Performance

Torrent Pharma’s base business, excluding JB Pharma, delivered revenue from operations of approximately Rs 3,720 crore in Q1FY27, representing growth of approximately 17 per cent year on year. Growth across India, Brazil, the US and Germany was 19 per cent, 27 per cent, 36 per cent and 3 per cent, respectively. Base-business EBITDA increased 20 per cent to Rs 1,240 crore.

Following the consolidation of JB Pharma, reported revenue was Rs 4,835 crore and EBITDA was Rs 1,664 crore, implying an EBITDA margin of 33.8 per cent. Consolidated gross margin was 76.4 per cent. Quarterly net sales increased 54.6 per cent year on year and 17.1 per cent sequentially, while EBITDA increased 61.2 per cent year on year.

India Business: Chronic Growth and Semaglutide Opportunity

India growth was driven by volume outperformance against the Indian Pharmaceutical Market in chronic and sub-chronic therapies, base brands and Curatio. Curatio grew 31 per cent in Q1FY27, and management expects this momentum to continue.

Generic semaglutide held a 36 per cent combined oral and injectable market share and contributed approximately 3 per cent of India business growth. Its Q1FY27 revenue contribution was approximately Rs 50 crore. Supply issues at a vendor affected approximately 20 per cent of Torrent Pharma’s semaglutide stock-keeping units, with alternative supplies expected to begin in August 2026.

Management aims for mid-teen growth in the base business in FY27 and double-digit growth in India. Following the JB Pharma acquisition, Torrent Pharma became the market leader in the domestic cardiac segment.

The combined business has 9,400 medical representatives. Management may reallocate personnel and reduce the total field force to 9,000. Productivity per medical representative was Rs 10 lakh, which management expects to improve.

International Business Outlook

Brazil

Brazil benefited from key brands and new launches, with growth of 21 per cent against a 5 per cent market growth rate. Management stated that a one-time channel inventory reduction affected reported Brazil growth. Adjusted Q1FY27 growth was 15 to 18 per cent, while constant-currency growth is expected to recover to the mid-teens in the following quarter.

Management expects approval for generic semaglutide in Brazil within the next few months and is targeting a double-digit market share.

Germany and the United States

Germany constant-currency revenue declined 9 per cent because of third-party supply disruptions and lower tender offtake, although currency movements supported reported performance. US growth was supported by recent launches, market-share gains and certain one-off opportunities.

JB Pharma Performance and Integration Benefits

JB Pharma’s base business revenue grew 10 per cent in Q1FY27, while EBITDA rose 34 per cent and the EBITDA margin expanded to 35.3 per cent from 28.8 per cent a year earlier. JB Pharma’s domestic and international businesses grew 13 per cent and 12 per cent year on year, respectively.

Management expects double-digit prescription-business growth and further international growth. The report expects approximately Rs 100 crore of cost synergy in FY27 against a Rs 90 crore target. It also states that the previously anticipated Rs 450 crore of cost synergies could be realised earlier than the earlier three-year timeframe.

• The combined business has become the market leader in the domestic cardiac segment.
• Cross-selling revenue synergies and the integration of JB Pharma are key monitorables.
• Management expects to improve productivity per medical representative while considering a reduction in the combined field force from 9,400 to 9,000 representatives.

Financial Forecasts

Key Monitorables and Risks

ICICI Direct identifies sustained momentum in India and Brazil, maintenance of margins, cross-selling revenue synergies and the integration of JB Pharma as key monitorables.

The key risks are currency volatility in Brazil and other emerging markets, and an inability to sustain the EBITDA-margin trajectory.