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Torrent Pharma: Poor US Show Overshadows Growth in Other Markets - Views on News from Equitymaster
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  • Jul 7, 2017 - Torrent Pharma: Poor US Show Overshadows Growth in Other Markets

Torrent Pharma: Poor US Show Overshadows Growth in Other Markets
Jul 7, 2017

Torrent Pharmaceuticals has announced its March quarter (4QFY16) results. The company has reported a decline of 4.6% YoY in sales and 27.5% YoY decrease in net profits. Here is our analysis of the results.

Performance summary
  • Topline declined by 4.6% YoY during the quarter. This was largely due to pricing pressure in the key drug (Abilify). Since April 2016, four new players entered the market leading to sharp erosion in the pricing. US business for the quarter were down by 45% YoY.
  • India business witnessed growth of 9% YoY in Q4. For FY17, India business grew by 12.5% YoY as compared to market growth of 10%.
  • Revenue growth YoY for Brazil in INR terms stood at 81% and 38% for the quarter and for the year respectively.
  • German market witnessed robust growth of 43% YoY for the quarter and 25% for the year
  • US price erosion led to a decrease in EBITDA margins. EBITDA margins stood at 20.6% for the quarter as compared to 32.4% a year ago.
  • As a result, Net profits also declined by 27.5%

    Financial performance: A snapshot
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Net sales 14,770 13,810 -6.5% 65,400 57,130 -12.6%
    Other operating income 260 530 103.8% 1,470 1,440 -2.0%
    Total Sales 15,030 14,340 -4.6% 66,870 58,570  
    Expenditure 10,160 11,390 12.1% 39,530 44,790 13.3%
    Operating profit (EBDITA) 4,870 2,950 -39.4% 27,340 13,780 -49.6%
    EBDITA margin (%) 32.4% 20.6%   40.9% 23.5%  
    Other income 240.0 1,040.0 333.3% 2,250 2,230 -0.9%
    Interest (net) 380.0 580.0 52.6% 1,840 2,060 12.0%
    Depreciation 630.0 970.0 54.0% 2,380 3,070 29.0%
    Profit before tax 4,100 2,440 -40.5% 25,370 10,880 -57.1%
    Exceptional Items 0 0   1,940    
    Tax 1,260 380 -69.8% 6,100 1,540 -74.8%
    Minority Interest 0 0   0 0  
    Profit after tax/(loss) 2,840 2,060 -27.5% 17,330 9,340 -46.1%
    Net profit margin (%) 19.2% 14.9%   26.5% 16.3%  
    No. of shares (m) 0 170     170  
    Diluted earnings per share (Rs)   12.12     54.9  
    Price to earnings ratio (x)*         23.1  

    *based on trailing 12 months earnings


    Business Mix
    4QFY16 4QFY17 Change FY16 FY17 Change
    Domestic 4,510 4,670 3.5% 18,340 19,770 7.8%
    (% of consolidated revenues) 30.0% 32.6%        
    Exports 10,520 9,670 -8.1% 48,530 38,800 -20.0%
    (% of consolidated revenues) 70.0% 67.4%        
    Total 15,030 14,340 -4.6% 66,870 58,570 -12.4%
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