TORNTPHARM Q3 2024-2025 Call Highlights: Margins Surge, India Growth, & Insulin Recovery!

Torrent Pharmaceuticals Ltd., a leading pharma company in India, in its Q3 earnings call addressed that it expects to maintain a 32.5% margin in Q4, with annual improvements of 50-100 basis points, while its insulin CMO business anticipates significant spillover beyond the normal quarterly run rate. In India, the company showed strong performance in chronic segments and added 500 medical representatives, while its Brazil operations expect double-digit price increases from April despite currency challenges. For GLP-1 products, the company plans to partner for injectables while producing oral versions in-house, showing more optimism for the Indian market. The company’s capital allocation prioritizes India first, followed by branded generics and developed markets, while the US business shows slow growth due to older ANDAs and low single-digit new filings.

Torrent Pharmaceuticals reported net profit rising 14% year-over-year to INR503 crore and revenue growing by approximately 3% to INR2,809 crore, with EBITDA increasing 5.2% to INR914 crore and margin improving to 32.5%. The company’s strong performance was driven by its Indian business, which grew 12% to INR1,581 crore and represents about 56% of quarterly turnover, with 20 brands in India’s top 500 pharmaceuticals, including 13 brands generating over INR100 crore each. International markets showed mixed results, with Brazil revenues declining 7% due to currency depreciation, Germany grew 4%, and the US declined 1%.

Continue Reading: Discover the Vital Insights from Torrent Pharmaceuticals Ltd.’s Earnings Call!

Financial/Operational Metrics:

• Revenue: INR2,809 crores, up 3% YoY.
• Net Profit: INR503 crores, up 14% YoY.
• Gross Margin: 76%, up 1.5 percentage points YoY.
• Operating EBITDA: NR914 crores, up 5% YoY.
• R&D Spend: INR151 crores, up 19% YoY.

Outlook:

• Insulin CMO: Sales to resume in January 2025, expected to positively impact future quarters.
• Insulin Revenues: Expected to improve in Q4 FY25 with spillover from Q3.
• Brazil Business: BRL depreciation expected to impact results for the next few quarters.
• Germany Business: Continued tender wins indicate high single-digit growth potential.
• US Business: Stable revenues anticipated with approvals for new filings in the pipeline.

 

Analyst Crossfire:

• Insulin CMO Business Recovery and Brazil Market Growth (Damayanti Kerai – HSBC): Significant spillover expected in Q4 over and above the normal run-rate of INR75-80 crores per quarter. Expected continuation of past trends with a bigger Q4, despite currency depreciation. Anticipation of higher price increases from the government starting in April (Aman Mehta – ED).

 

• Cardiac Segment Performance & SG&A Cost Moderation (Neha Manpuria – Bank of America): Cardiac growth was 16% vs. market 10%, attributed to restructuring and expansion. Decline in SG&A costs due to BRL depreciation, savings in manufacturing, efficiency in freight, and lower sales and marketing expenses (Aman Mehta – ED).

 

• US Market Outlook & Consumer Health Business Contribution (Tushar Manudhane – Motilal Oswal Financial Services): Slow pickup expected in the US due to aging ANDAs and low new filings, not leading to meaningful growth in the short term. Consumer health business contribution remains around 10-15% of total India business (Aman Mehta – ED).

 

• Brazil Market Growth Strategy & Germany Tender Outlook (Abdulkader Puranwala – ICICI Securities): Brazil’s market growth guidance at mid-teens, driven by government price increases and new product launches. Tenders in Germany provide high visibility, expecting cumulative growth from both tender and OTC segments (Aman Mehta – ED).

 

• Rest of World Market Growth & Margin Outlook (Nitin Agarwal – DAM Capital, Vivek Agarwal – Citigroup): Annualized growth for RW markets expected in high single to low double digits, with efforts to focus on higher growth markets. Expectation to maintain 32.5% margins in Q4, with a yearly improvement of 50 to 100 basis points, driven by branded segments and US market stabilization (Aman Mehta – ED, Sanjay Gupta – President and CEO).

 

• Insulin Business Gross Margins & GLP-1 Market in Brazil (Dheeresh Pathak – WhiteOak Capital, Vivek Agarwal – Citigroup): Gross margins for the insulin business are lower than the company average. The Brazilian market for GLP-1 has been supply-constrained, with expectations of significant volume increase as supply stabilizes (Sudhir Menon – CFO and ED, Finance).

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