Torrent Pharmaceuticals Ltd

Torrent Pharmaceuticals Ltd

Torrent Pharmaceuticals Ltd is engaged in therapeutic areas of metabolic, cardiovascular and respiratory disorders.

Torrent pharma (CMP 1470) is a Formulations and API player that manufactures Branded Generics for India, Brazil and Phillipines, and Generic drugs for US, Germany and UK.

Market Cap.: ₹ 23,282.98 Cr.
Current Price: ₹ 1,375.90
Book Value: ₹ 229.76
Stock P/E: 18.39
Dividend Yield: 2.54%
Face Value: ₹ 5.00

Good dividend yield
Why not reinvest anyway good for me check for management.

Net profit: 1,722.38
This year is not so good

Profit growth: 35% OMG !! Too great growth can the company manage this much growth? I don’t think so. But even if it can manage half of this growth it would be still good to me.

So cheap stock almost half priced but profit growth is a lot to maintain now. May be the best is over? Or when the company was still new growth is a lot. I don’t think it can take the mark of Cadila.

Young company growth or at least maximum indian company’s growth is very high at this time or in past 1-2 years.

Still the price is great even if growth decrease by 1/2

Management: Clean good management

Shareholder letter is not good seems like written by an MBA rather than the management.

I am not so sure about US sales which is the case for all pharma industry. Can Trump affect US sales?

Domestic market 35% revenues in FY15

US market 18% revenues FY15

Indian Pharma Industry overall has seen lot of growth in past couple of years.

Compared with Cadila I guess Torrent outlook is weak. Cadila has a brand. Management is too good. Cadila has some daily life products like EverYouth, Sugar Free (Natura), Nutralite etc. Price wise Torrent is cheap almost half if past trends continue.

Strength Weakness Opportunities Threats (SWOT)

Strengths- Chronic focus, high operating margins, high return ratios, strong emerging US pipeline and one of the highest dividend payout ratios.

Weakness- Brazilian market remains dicey due to frequent changes in regulations and pricing. Relatively late US entrant.

Opportunities- The US Generics space.

Threats- Increased USFDA scrutiny across the globe regarding cGMP issues and consolidation in the US pharmacy space. Political turmoil in Brazil.

To me Pharma industry also seems a little risky. You need to be very careful at each step of production.

Final Verdict: I can consider investing

I am very new to value investing and this is me taking random notes just for myself. Please don’t base any of your decision on these write-ups. That will be foolish.


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