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Shares of Torrent Pharmaceuticals Ltd have gained more than 10% over the last one week. The renewed investor confidence is led by expectations of a strong growth trajectory in the domestic market, which have prompted analysts at Credit Suisse to upgrade the stock to “outperform” from “underperform”.
The company had reported lower-than-expected performance for September quarter.
Credit Suisse analysts feel India, which accounts for 80% of Ebitda, should grow in double digits with sales force expansion and the company entering the OTC (over-the-counter), wellness, and trade generic segments. Ebitda stands for earnings before interest, taxes, depreciation, and amortization.
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The company reported strong India growth of 13% year-on-year (y-o-y) for Q2FY22, though overall performance did not live up to expectations. This was led by robust recovery in the acute segment and market share gains in the chronic portfolio. Torrent’s secondary market sales, too, had grown at 19% versus 15% for the Indian pharma market.
The company had boosted its medical representative productivity to ₹10 lakh per month compared with ₹85,000 in FY21 for the second consecutive quarter, analysts pointed out. The India sales force productivity over the past four years rose to its highest level in the industry. Torrent’s efforts on expanding its field force with a focus on increasing doctor and geographical coverage should further propel India growth, analysts said.
Other markets such as Brazil, which showed 21% y-o-y growth, also help keep sentiment upbeat. However, the weak link remains US sales as regulatory issues with the US Food and Drug Administration pertaining to its two manufacturing facilities remain unresolved.
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