Shares of Torrent Pharmaceuticals Ltd have gained over 10% in the past one week. Renewed investor confidence is driven by expectations of a stronger growth trajectory in the domestic market, which has prompted analysts at Credit Suisse to upgrade the stock from “underperform” to “outperform.”
The company’s performance in the September quarter was below expectations.
Analysts at Credit Suisse believe India, which accounts for 80% of Ebitda, should grow in double digits with expansion of sales force and foray into OTC (over-the-counter), wellness and trade generic segments . Ebitda means earnings before interest, tax, depreciation and amortization.
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The company posted strong India growth of 13% year-on-year (YoY) for Q2FY22, though the overall performance did not live up to the expectations. This was driven by strong recovery in the fast segment and increase in market share in the older portfolio. Torrent’s secondary market sales also grew at a rate of 19% versus 15% for the Indian pharma market.
The company had increased its medical representative productivity 10 lakh per month as compared to 85,000 for the second consecutive quarter in FY11, analysts pointed out. India’s sales force productivity has reached its highest level in the industry in the last four years. Analysts said Torrent’s efforts to expand its field force with a focus on increasing doctor and geographic coverage would further boost India’s growth.
Other markets such as Brazil, which registered 21 per cent year-on-year growth, helped keep the sentiment upbeat. However, US sales remain the weak link as regulatory issues related to its two manufacturing facilities remain unresolved with the US Food and Drug Administration.
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