ICICI Direct is bullish on Torrent Pharmaceuticals has recommended buy rating on the stock with a target price of Rs 1850 in its research report dated November 05, 2018.
ICICI Direct's research report on Torrent Pharmaceuticals
Q2Y19 results were almost in line with I-direct estimates on the revenue and net profit fronts. However, EBITDA margins were lower mainly due to one-off impact of product recall in the US. Revenues grew 32.5% YoY at Rs 1894 crore (I-direct estimate: Rs 1900.4 crore) due to reported strong growth across geographies. Indian formulations grew 34.4% led by consolidation of Unichem EBITDA margins improved 195 bps YoY to 25.0% YoY (I-direct estimate: 26.3%). Net profit de-grew 12.3% YoY to Rs 179 crore (I-direct estimate: Rs 177 crore) due to higher interest and depreciation cost pertaining to the Unichem acquisition and lower other income.
Outlook
However, in the long term, higher FCF generation should mitigate the strain. We arrive at a target price of Rs 1850 (15x of FY20E EV/EBITDA).
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