Torrent Pharmaceutical's Q4FY18 consolidated net profit rises 10.68% yoy to Rs228cr : Misses Estimates

The company’s consolidated revenue stood at Rs1,722cr, up 20.08% yoy and 16.59% qoq.

May 31, 2018 05:05 IST India Infoline Research Team


Consolidated Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 1,722 20.1
EBITDA 364 23.4
EBITDA Margin (%) 21.1 57
Net Profit (adjusted) 228 10.7
***EBITDA margin change is bps

Torrent Pharma’s revenue in Q4FY18 grew by 20.1% yoy to Rs1,722cr. EBITDA increased by 23.4% yoy to Rs364cr from Rs295cr in Q4FY17. EBITDA margins in Q4FY18 were at 21.1% vs. 20.6% in Q4FY17 and 24.3% in Q3FY18. PAT grew by 10.7% yoy to Rs228cr in Q4FY18 vs. Rs206cr in Q4FY17.
  • India business grew 48% yoy to Rs693cr in Q4FY18. This number includes full quarter revenue of Unichem Laboratories, hence they are not comparable on like to like basis.
  • Revenue in Brazil was flat at Rs215cr in Q4FY18.
  • US business reported 9% yoy growth to Rs307cr. The Q4FY18 revenues include revenue from liquid and suppository manufacturing facilities acquired during the quarter.
  • German business grew 6% yoy to Rs248cr.
  • The contribution of the domestic business in total revenue has gone up by 539bps yoy to 40.2% in Q4FY18. At the same time, the contribution of the US business has come down by 365bps to 17.8% in Q4FY18.
  • Gross margins in Q4FY18 were at 73.1% vs. 73.5% in Q3FY18 and 65.8% in Q4FY17.
  • Company has recorded deferred tax of Rs155cr in the quarter.
  • Total debt by end of FY18 stood at Rs5,737cr vs. Rs2,241cr in FY17. Debt-to-equity ratio for FY18 stood at 1.05x vs. 0.58x in FY17.
  • Working capital cycle, post the Unichem acquisition, has elongated by 38 days. In FY17, working capital cycle was 20 days while that by end of FY18 it is 38 days.
Concall highlights
  • Ex-Unichem, Torrent’s organic growth in India was 11% yoy in Q4FY18.
  • Management has said that Unichem’s brands Losar, Unienzyme and Ampoxin were declining but under Torrent, they have started to grow and Torrent expects growth in Unichem portfolio from Q1FY19E onwards.
  • Under Torrent, attrition in Unichem has come down to ~20% from earlier 30-40% and current MR strength in Unichem is 2,200.
  • By end of FY19E, Torrent expects to fully integrate Unichem.
  • 75% of Torrent’s domestic business is in chronic/speciality categories.
  • Shelcal reported annual sales Rs375cr in FY18, while acquired brands from Novartis have delivered 22% yoy growth.
  • US business saw pricing pressure but overall numbers are satisfactory due to volume growth.
  • In Germany, Torrent is the fourth largest player with 7.1% market share and has launched 16 products in FY18.
  • During Q4FY18, Torrent launched one suppository product from Biopharma. Biopharma, however, has smaller products with average size of $0.5-$1 mn and a single product of potential ~$5mn sales.
  • Its US business clocked $40mn sales in the quarter and it should be the base going ahead. Company expects 15-20 ANDA fillings and 8-10 approvals in FY19E.
  • During the quarter, there was Rs50cr one-off in SG&A expenses, adjusted for which, EBITDA margin is 24% and PAT growth would be ~18%.
  • FY19 tax rate at 27%.

Technical View:

Torrent Pharmaceuticals Ltd is currently trading at Rs. 1,329, down by 19.1 points or 1.42% from its previous closing of Rs. 1,348.10 on the BSE.
The scrip opened at Rs. 1,345 and has touched a high and low of Rs. 1,359.80 and Rs. 1,315 respectively. So far 1,57,269 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 100 DMA.

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