1. Healthcare

29 January 2015
3QFY15 Results Update | Sector: Healthcare
Torrent Pharmaceuticals
BSE SENSEX
29,682
Bloomberg
S&P CNX
8,952
TRP IN
Equity Shares (m)
169.2
M.Cap. (INR b) / (USD b) 192.5/3.1
52-Week Range (INR)
1,232/512
1, 6, 12 Rel.Per (%)
-5/43/72
Avg Val(INR M)/Vol ‘000
Free float (%)
88/115
28.5
Financials & Valuation (INR Billion)
Y/E MAR
2015E 2016E 2017E
Net Sales
46.8
57.2
66.6
EBITDA
11.0
14.5
17.3
Adj PAT
Adj.EPS
( )
Gr. (%)
7.0
8.6
10.8
41.3
50.9
64.0
30.2
BV/Sh.(INR) 143.5
RoE (%)
32.2
23.3
25.9
176.7
218.6
31.8
32.4
RoCE (%)
28.4
25.4
28.2
P/E (x)
27.6
22.4
17.8
P/BV (X)
7.9
6.4
5.2
Estimate change
TP change
Rating change
CMP: INR1,138
TP: INR1,410 (+24%)
Buy
In-line quarter; Await further margin accretion from Elder portfolio
3Q profits at INR 1.7b (up 6% YoY) was above expectations, thanks to lower tax rate
(17% vs 21% est) and higher other income (mainly fx gains). Operational numbers
were 3-4% below forecast as forex fluctuation hurt EU/Latam sales (1/3rd of total).
Revenues grew 15% YoY to INR 11.7b while EBITDA expanded 12% YoY to INR 2.4b,
mainly as EBITDA margins were subdued at 20.5% (vs 20.7% estimate).
Domestic growth robust, improved pace of new launches to fuel US growth: India
business growth (ex-Elder) was at 15% (vs 11% for industry) as sequential growth in
Elder portfolio was restrained due to channel filling in 2Q. Delay in product launch and
currency movement hurt EU sales (down 9% YoY) while Latam business sustained
healthy traction (up 19% in constant currency, 6% in INR terms). Fewer new launches
in US restricted growth (up 16% YoY, 3% QoQ) but we expect interesting launches like
gDetrol, gNexium, gAbilify to fuel growth momentum in coming quarters. Over FY1517E, we project TRP’s revenues to grow at 19% CAGR.
Margin expansion likely from high-impact US launches, Elder brands synergy: EBITDA
margins at 20.5% (down 60bp YoY) were impacted by lower US sales, partial impact of
price hikes in Elder portfolio and forex fluctuation (Eu/Latam/Russia). We expect
EBITDA margins to expand by 260bp over FY15-17E led by (a) synergies from Elder
brand acquisition (300 MRs reduction in FY15, price hikes, cross selling), (b) high
impact US launches and (c) improved MR productivity in India (by 25% in ~3 yrs).
Hence, EBITDA is likely to outpace revenue growth at 25% CAGR over FY15-17E.
Earnings acceleration to drive valuation upside: Despite the recent stock
outperformance, we are optimistic on TRP’s prospects for further re-rating due to (a)
strong earnings growth at 25% CAGR, (b) earlier than expected payback of Elder brand
acquisition (within five years vs 7-8 years initially assumed), (c) reduced leverage (D/E
to improve to 0.6x by FY17E v/s 1x now). Regulatory delays affecting US launches,
impact of price control (India/Brazil) are key risks to our thesis. Maintain Buy rating
with target price of INR 1,410 (22x FY17E EPS, in line with sector average).
q
Arvind Bothra ([email protected]);+91 22 3982 5584
Amey Chalke ([email protected]);+91 22 3982 5423
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Torrent Pharmaceuticals
3Q Result analysis
Exhibit 1: Quarterly Snapshot (Revenue mix)
(INR m)
Revenue split
USA
India
Europe
LatAm
RoW
CRAMs
Total revenues
3Q FY14
2Q FY15
3Q FY15
%YoY
1,480
2,970
2,480
1,480
950
540
9,900
1,668
4,420
2,480
1,600
970
893
12,030
1,710
4,200
2,270
1,560
1,060
760
11,560
15.5
41.4
(8.5)
5.4
11.6
40.7
16.8
%QoQ
Comments
Fewer new launches restricted growth
2.5
Ex-Elder brands, growth was robust at 15%
(5.0)
(8.5) Price erosion in Seroquel, deferred shipment affected growth
Growth in constant currency was robust (19%)
(2.5)
9.3
(14.8)
Revenues were marginally below expectations
(3.9)
Source: Company, MOSL
Exhibit 2: Quarterly Profit and Loss statement
(INR m)
Total revenues
Other operating income
Operating income
Cost of revenues
Gross profit
Gross margin (%)
Staff cost
% of Total Revenues
Other expense
% of Total Revenues
EBITDA
EBITDA margin (%)
Depreciation expenses
EBIT
Interest cost
Other (expenses)/income net
PBT
Income tax (benefit)/expense
Effective tax rate (%)
Net Profit - reported
Adjusted Net Profit
3Q FY14
9,900
250
10,150
3,180
6,970
67.9
1,790
18.1
3,030
30.6
2,150
21.2
210
1,940
160
100
1,880
300
16.0
1,580
1,580
2Q FY15
12,030
140
12,170
3,810
8,360
68.3
2,240
18.6
3,390
28.2
2,730
22.4
560
2,170
540
720
2,350
370
15.7
1,980
1,980
3Q FY15 %YoY %QoQ
Comments
11,560
16.8
(3.9)
120 (52.0)
(14.3)
11,680
15.1
(4.0)
3,720
17.0
(2.4)
7,960
14.2
(4.8)
67.8 (6)bp (51)bp Adverse currency movement impacted gross margins
1,990
11.2
(11.2) Impact of reduction in 150 MRs (Elder synergies)
17.2 (87)bp (141)bp
3,570
17.8
5.3
30.9 28 bp 270 bp
2,400
11.6
(12.1)
20.5 (63)bp (188)bp Margins were slightly below expectations (20.7%)
540 157.1
(3.6)
1,860
(4.1)
(14.3)
500 212.5
(7.4)
650 550.0
(9.7)
Includes MTM forex gains
2,010
6.9
(14.5)
340
13.3
(8.1)
16.9 96 bp 117 bp Lower than expected tax rates boosted net profits
1,670
5.7
(15.7)
1,670
5.7
(15.7)
Source: Company, MOSL
Forex fluctuation hurt revenue momentum
3Q Revenues grew 15% YoY to INR11.7b, 3% lower than our estimates, attributed to
currency fluctuation impacting Europe/Latam business. Slower pace of new product
approvals restricted US ramp-up, while domestic growth was robust (up 15% YoY,
ex-Elder portfolio). RoW sales reported 12% YoY to INR1.1b, aided by a favorable
base. We expect revenue momentum to pick up gradually; as full impact price hikes
in domestic market (Elder portfolio) gets reflected and new launches in US picks up
momentum.
29 January 2015
2
Torrent Pharmaceuticals
Exhibit 3: Quarterly sales (INR b)
Sales (INR b)
29
27
25
15
8
8
8
9
10
10
10
12
11
12
12
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
15
12
3QFY13
27
2QFY13
27
1QFY13
18
YoY growth (%)
41
15
Source: Company, MOSL


US (19% of sales): US business grew 16% YoY to INR1.7b, lower than our
expectations due to slower ramp up in newly launched products. Traction in
new launches over the last 3 quarters has lagged expectations as market share
gains have been steady. Moreover, pace of ANDA approvals has also slowed,
impacting growth in US.
Only 1 ANDA was filed during this quarter. TRP received 2 ANDA approvals in
3QFY15 for gWellbutrin SR and gLuvox. TRP has maintained its guidance to
launch 8-10 products each year. Cumulatively, Torrent has received 53 ANDA
approvals and has 19 pending filings till date (another 44 under development).
The company expects to file 10-12 new ANDAs annually and has visibility for 911 new launches in FY16E. With interesting launches like gNexium, gDetrol,
gExforge expected over the next 3-4 quarters, we expect growth momentum in
US to accelerate (adjusted for one-off sales from gCymbalta last year).
Exhibit 4: US revenues (Quarterly)
US base sales (USD m)
One-offs (USD m)
37
21
15
17
17
17
20
19
17
28
24
25
25
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4
2QFY13
3
1QFY13
7
Source: Company, MOSL

29 January 2015
India (28% of sales): India business registered 42% growth YoY (INR 4.2b), aided
by recent addition of acquired portfolio (Elder). Excluding Elder brands, India
business grew 15% for this quarter, much ahead of industry growth of 11%. We
believe the full impact of price hike undertaken in Elder portfolio (in midNov’14) would reflect from next quarter, improving revenue growth as well as
profitability. Growth in Elder portfolio on sequential basis was affected by
channel filling in 2QFY15. Revenue contribution from the acquired business
stood at ~INR800m, which will continue to see higher growth for the next few
quarters. Improved traction in Elder portfolio with sharper focus as well as 183
Torrent Pharmaceuticals
20 new launches annually should help Torrent outpace industry growth over
medium term.
Exhibit 5: India Revenues (Quarterly)
India sales (INR b)
Elder sales (INR b)
YoY growth (%)
49
3
3
2
3
2QFY13
3QFY13
4QFY13
1QFY14
3
15
17
3
3
3
3
3
3QFY15
3
10
2QFY15
12
1QFY15
10
4QFY14
13
41
0.8
3QFY14
15
2QFY14
13
1QFY13
0.9
13
Source: Company, MOSL



Brazil (13% of sales): Brazil business grew 6% in 3Q, affected by currency
depreciation as constant currency growth was higher at 19% YoY. Volume
growth has been the primary driver for the company. TRP has also entered into
Institutional business in Brazil and is witnessing good traction in this segment.
Nebivolol continues to do well with 29% market share in branded market.
Torrent expects to continue outpacing industry growth led by focus on specialty
segment, improvement in MR productivity and scale-up of power brands.
Europe (22% of sales): Europe business suffered from deferment of new
launches, price erosion in key brand Seroquel (generic) as well as currency
depreciation, registering a decline of 9% YoY. Constant currency growth was flat
during the quarter. Management expects pick-up in growth in the coming
quarters as it continues to be successful in tender business participation in
Germany (130 molecules in the market).
ROW (9% of sales): Despite sharp depreciation of Russian currency affecting
growth (Russia is 3-4% of total sales), RoW business grew 12% YoY, led by
Mexican operations. Rapid pace of new launches in Mexico, Malaysia and
Philippines as well as expanded geographical reach would aid healthy growth in
RoW business.
Exhibit 6: Brazil revenues (Quarterly)
Brazil (INR b)
YoY growth (%)
12
8
6
5
-2
1.3
1.3
1.3
1.5
-4
1.3
1.5
1.6
1.6
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
-3
4QFY13
2QFY13
1QFY13
-7
1.2
3QFY13
1.2
1.4
28
26
26
Source: Company, MOSL
29 January 2015
4
Torrent Pharmaceuticals
Margins in line, expect improving trajectory ahead
3Q EBITDA margin declined 60bp YoY to 20.5% (vs 20.7% est), mainly restricted by
slower US growth and higher staff costs. Consequently, EBITDA grew slower than
top line at 12% YoY to INR 2.4b (vs INR 2.5b est). We believe that full impact of price
hikes taken in Elder portfolio would be seen from 4QFY15 and help in margin
expansion. Over FY15-17E, we expect Torrent’s EBITDA margins to improve from
23.5% to 26% driven by (a) Improved MR productivity in domestic business
(management is targeting improvement from INR 5m per person annually to INR
9.6m per person annually), (b) scale-up in US business backed by high value
launches like gNexium, gAbilify, etc and (c) improved profitability in Latam business.
Net profit beat led by higher other income
TRP reported 6% growth in net profits at INR 1.7b, 10% ahead of our expectations,
mainly due to higher other income of INR 650m (vs INR550m est) and lower
effective tax rate of 17% (21% est). Other income largely comprised of forex gains
arising out of hedges (mainly for European business). Operational results however
were largely in line. Excluding the impact of one-off sales in 3QFY14 (Cymbalta),
there was a PBT/PAT growth of 30%+ during the quarter (per management).
Exhibit 7: EBITDA margins moderated with lower Cymbalta
71.8 75.2
26.1
1.0
1.1
1.2
1.5
1.1
1.3
1QFY14
2QFY14
3QFY14
2.4
2.6
2.0
1.7
3QFY15
1.0
4QFY13
17.4 17.9
3QFY13
3QFY15
46.3
35.0
2QFY13
2.4
(3.7)
105.0
1QFY13
2.7
Source: Company, MOSL
29 January 2015
112.6
14.1
2QFY15
2.2
3.5
1QFY15
1.8
4QFY14
3QFY13
2.1
3QFY14
2QFY13
2.2
2QFY14
1.6
1QFY14
1.4
4QFY13
1.6
1QFY13
3.5
YoY growth (%)
2QFY15
EBITDA margin (%)
31.0
28.6
25.3
22.4 20.5
21.4
21.2
20.3 18.8 20.2
18.4
1QFY15
EBITDA (INR b)
Exhibit 8: PAT growth trends
PAT (INR m)
4QFY14
sales
Source: Company, MOSL
5
Torrent Pharmaceuticals
Key earnings call takeaways




29 January 2015
Fund raising plans: Torrent has announced fund raising plans of upto INR 105bn,
including INR 30b equity (15% of current market cap) through QIP route and
upto INR 75b from debt. Management has indicated that it would utilized for
future acquisition in US, In organic growth opportunities in India and debt
reduction.
Robust US pipeline to drive growth: US business witnessed moderated growth
over high base, lack of new launches and slow ramp up in existing products. The
company has plans to launch gAbilify (Mkt size: USD1.6b, under litigation, 4-5
tentative approvals), gDetrol LA(USD 590m, 2 players in market) filed), gExforge
HCT(USD 160m, one player in market), gDiovan HCT(USD1.7b) and
gNexium(USD 2.3b, more than 10 players in para IVs). We believe these
incremental launches would drive strong growth momentum in US over FY1617E.
Moderate capex requirement: Capex guidance stands at INR2-2.5b for next two
years (vs INR 7b over FY13-14). The company has plans to commission its Dahej
SEZ formulation facility in 2HFY16 thereby de-risking regulatory exposure to
single facility for US.
Price hike in Elder portfolio: The company undertook price hike in key brands
acquired from Elder Pharma (namely Shelcal, Chymoral and Carnisure) in midNovember (2014). The impact of the same was partially reflected in 3Q and is
likely to be prominently seen in the coming quarters. Moreover, the company
also has plans to discontinue volume discount for key products as well as reduce
trade margins, thereby boosting profitability for domestic business.
6
Torrent Pharmaceuticals
Operating metrics
Exhibit 9: Key operating metrics
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13 1QFY14 2QFY14
3QFY14 4QFY14
1QFY15 2QFY15
3QFY15
USA
9.3
10.3
11.9
11.5
10.6
11.6
11.8
14.6
32.6
24.1
13.7
14.6
India
29.4
36.2
34.9
32.4
25.0
32.1
30.6
29.3
20.9
31.6
36.3
36.0
Europe
19.6
17.1
19.6
19.5
24.2
20.1
24.2
24.4
20.5
20.6
20.4
19.4
LatAm
18.5
17.7
14.9
14.7
15.3
13.7
12.9
14.6
10.4
13.4
13.1
13.4
RoW
10.0
9.2
8.9
9.8
9.4
8.7
10.0
9.4
8.4
7.7
8.0
9.1
CRAMs
12.4
8.9
9.0
11.4
14.6
12.5
10.5
7.8
7.2
2.6
8.5
5.7
Revenue Gr. (%)
34.5
21.0
13.3
14.1
22.7
22.9
25.1
28.6
50.4
20.8
28.7
16.8
USA
314.5
88.3
70.5
43.8
46.0
43.2
24.5
60.9
334.8
137.6
45.0
15.5
India
10.1
13.5
14.7
12.7
9.8
12.3
9.6
14.9
17.4
12.8
48.8
41.4
Europe
14.9
8.1
5.5
8.3
59.5
49.0
54.2
59.0
19.0
17.3
5.5
(8.5)
LatAm
58.2
26.2
(6.5)
(2.5)
6.3
(1.8)
7.7
26.5
(3.8)
12.0
28.0
5.4
RoW
20.8
68.3
19.7
30.0
21.7
20.6
41.0
21.8
25.6
1.2
-
11.6
CRAMs
24.6
(19.5)
1.1
5.6
17.5
4.9
50.8
(28.0)
(14.9)
(61.9)
(2.0)
15.0
Raw material
34.1
29.9
29.5
32.1
30.3
33.7
32.2
32.1
26.5
27.6
31.7
32.2
Staff cost
22.1
20.8
21.1
20.0
20.4
19.0
19.4
18.1
17.2
16.8
18.6
17.2
Other expenses
34.0
32.3
33.9
30.7
30.4
31.9
33.1
30.6
28.7
26.0
28.2
30.9
3.6
26.6
24.1
21.6
24.5
20.3
25.7
16.0
23.0
26.6
15.7
21.0
Gross Margins
65.9
70.1
70.5
67.9
69.7
66.3
67.8
67.9
73.5
72.4
68.3
67.8
EBITDA Margins
12.6
20.3
18.8
20.2
25.3
21.4
18.4
21.2
28.6
31.0
22.4
20.5
EBIT Margins
9.4
17.7
16.2
17.7
22.7
19.2
16.2
19.1
26.7
29.1
17.8
15.9
PAT margins
8.3
13.3
12.6
14.1
13.7
15.3
11.6
15.6
19.9
23.0
16.3
14.3
Source: Company; MOSL
Revenue Mix (%)
As % of sales
Tax Rate
Margins (%)
29 January 2015
7
Torrent Pharmaceuticals
Valuation and view
Strong traction in US business (including one-off) as well as expectations of higher
synergy benefits from Elder’s domestic portfolio acquisition has aided re-rating for
TRP over the last twelve months. We expect core earnings (excluding one-offs)
trajectory to remain strong (forecast 25% CAGR over FY15-17E) as we think margin
upside in domestic portfolio is still not fully reflected. We expect the stock trade
much above its historic P/E band due to higher revenue visibility and deleveraging
prospects.
Our TP of INR 1410 implies 24% upside from current levels. Our TP discounts TRP’s
base business at 22x FY17E P/E, in line with current sector average multiple. This is
at the higher end of its historical average and in line with current multiples (22.4x
FY16E). Sustenance of high earnings growth and de-leveraging of Balance Sheet
justify upward shift of its average P/E band upwards.
Key catalysts to drive stock’s performance over the medium term are:
Improvement in EBITDA margin, mainly on stronger contribution from Elder
brands
Execution in key US launches including gAbilify, gNexium, gExforge
Improved free cash generation, driving Balance Sheet deleveraging



Risks to our investment thesis:
Regulatory delays could affect timely launch of key US launches.
Increased span of drug price control could hurt domestic business (34% of total
sales)
Unstable currency and macroeconomic outlook for key emerging markets like
Brazil/Russia could dampen growth prospects.



Exhibit 10: TRP has re-rated structurally (1 yr forward P/E
band)
Exhibit 11: TRP trades at 18% discount to Sensex P/E (LPA)
PE (x)
Median(x)
27
Peak(x)
Min(x)
Torrent Pharma PE Relative to Sensex PE (%)
LPA (%)
Avg(x)
22.8
22
22.2
100
40.6
50
17
12.9
12.6
12
7
0
-17.9
-50
3.9
2
Source: Company, MOSL
29 January 2015
Jan-15
Oct-13
Jul-12
Apr-11
Jan-10
Oct-08
Jul-07
Apr-06
Jan-05
Jan-15
Oct-13
Jul-12
Apr-11
Jan-10
Oct-08
Jul-07
Apr-06
Jan-05
-100
Source: Company, MOSL
8
Torrent Pharmaceuticals
Story in charts
Exhibit 12: Formulation led sales growth
Formulations (INR b)
Exhibit 13: Domestic sales growth led by Elder acqn. in FY15E
Revenues (INR m)
CRAMS (INR b)
Growth (%)
38.1
3
31.6
3
3
15.5
3
2
16
2
14
3
3
2
19
15.5
24
8.5
28
38
44
53
62
FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
12.7
7,254
8,377
9,090 10,240 11,620 16,050 21,129 24,823
FY10
FY11
FY12
FY13
FY14
US base sales (USD m)
One-offs (USD m)
Exhibit 15: Latam - Gradual recovery ahead
Latam revenues (INR m)
8
32
151
19
25
FY10
FY11
65
45
FY12
FY13
183
17.4
19.9
5,020
105
84
5.2
FY14
FY15E FY16E FY17E
3,012
3,612
4,770
FY10
FY11
FY12
FY13
12.7
14.8
15.0
5,340
6,017
6,907
7,943
FY14
FY15E FY16E FY17E
6.4
Source: Company, MOSL
Exhibit 16: Europe business to grow at 15% over FY15-17E
Europe (INR m)
Growth (%)
Source: Company, MOSL
Exhibit 17: Healthy return ratios
42.0
ROIC (%)
36.2
43.1
21.1
20.7
3.5
FY10
28.8
4,492
5,421
6,500
9,300
9,731 4.6
11,171 12,846
FY11
FY12
FY13
FY14
FY15E FY16E FY17E
Source: Company, MOSL
31.1
32.3 32.2
31.8
29.9
22.5
22.5
14.8 15.0
29 January 2015
29.7
33.5
25.7
RoE (%)
36.0
29.2
19.9
3,710
Growth (%)
32.1
8
44
FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 14: Base sales to grow at ~30% over FY15-17E
17.5
13.5
32.4
26.3
17.3
FY09
FY10
FY11
FY12
FY13
FY14 FY15E FY16E FY17E
Source: Company, MOSL
9
Torrent Pharmaceuticals
Exhibit 18: EBITDA growth (%)
Exhibit 19: Gross margin to improve over FY16-17E
EBITDA (INR b)
43.5
36.3
34.6
37.3
32.8
32.1
4
-5.1
4
5
7
10
11
EBITDA Margin (%)
67.2
70.0
68.3
68.0
71.2
70.3
69.4
71.3
71.3
18.4
21.5
17.6
19.4
21.6
22.7
23.4
25.4
26.0
FY09
FY10
FY11
FY12
FY13
FY14 FY15E FY16E FY17E
19.1
15.4
3
Gross Margin (%)
EBITDA growth (%)
15
17
FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 20: ANDA filed v/s pending
ANDA filed
Core EPS (INR/ share)
ANDA pending
One off
72
70
67
64
58
Exhibit 21: Core EPS to grow at 25% CAGR (FY15-17E)
0
45
32
29
21
FY09
FY10
32
FY11
27
FY12
8
24
21
19
FY13
FY14
YTD
0
3
1
14
16
16
19
28
32
41
51
64
0
-2
-3
-4
FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 22: Market share(%) of Micardis HCT in US; reflecting gradual ramp up
ROXANE
BI
TORRENT
MYLAN
QUALITEST
50.0
40.0
36.0
30.0
27.6
19.0
20.0
Jan-15
Dec-14
Dec-14
Nov-14
Nov-14
Oct-14
Oct-14
Sep-14
Sep-14
Aug-14
Aug-14
Aug-14
Jul-14
Jul-14
Jun-14
Jun-14
-
Jan-15
14.9
2.5
10.0
Source: Bloomberg, MOSL
29 January 2015
10
Torrent Pharmaceuticals
Corporate profile
Company description
Exhibit 23: Sensex rebased
Torrent Pharma is one of the second tier Pharma
companies that is actively targeting the regulated
generics and semi-regulated markets. The company
has strong presence in domestic market with focus
and leadership in CVS and CNS segments. Recent
acquisition of Elder’s brand in India strengthens its
positioning further. The company has large
presence in some of the key global markets like
Brazil and Germany while it is expanding its
footprint in key markets like US, Europe (excl.
Germany) and RoW.
Exhibit 24: Shareholding pattern (%)
Dec-14
Exhibit 25: Top holders
Sep-14
Dec-13
Promoter
71.5
71.5
71.5
DII
6.5
6.5
8.1
FII
12.9
12.8
10.5
Others
9.1
9.1
9.8
Holder Name
% Holding
Lavender Investments Ltd
Franklin Templeton Investment Funds
HDFC Trustee Company Ltd-HDFC Mid Cap
2.7
2.3
1.2
Note: FII Includes depository receipts
Exhibit 26: Top management
Exhibit 27: Directors
Name
Designation
Name
Name
Sudhir Mehta
Chairman
Sudhir Mehta
Markand Bhatt
Pradeep Bhargava*
Chaitanya Dutt
Haigreve Khaitan*
Samir Mehta
Shailesh Haribhakti*
*Independent
Exhibit 28: Auditors
Exhibit 29: MOSL forecast v/s consensus
Name
Type
Delloite Haskins & Sells
Kirit Mehta & Co
Statutory
Cost Auditor
29 January 2015
EPS (INR)
FY15
FY16
FY17
MOSL
forecast
41.3
50.9
64.0
Consensus
forecast
45.5
52.3
63.6
Variation (%)
-9.3
-2.7
0.6
11
Torrent Pharmaceuticals
Financials and valuations
Key assumption
Segment growth
USA
India
Europe
LatAm
RoW
CRAMs
Total Sales
Expenses
Cost of sales (%)
EBITDA Margin (%)
2010
227.0
15.5
3.5
17.4
28.9
12.8
13.4
2011
25.7
15.5
21.1
19.9
18.6
13.4
15.7
2012
89.2
8.5
20.7
32.1
67.8
41.2
27.2
2013
64.2
12.7
19.9
5.2
30.8
1.4
19.1
2014
118.6
13.5
43.1
6.4
27.9
0.3
30.3
2015E
6.7
38.1
4.6
12.7
1.1
(7.8)
11.9
2016E
14.9
31.6
14.8
14.8
14.8
12.0
22.2
2017E
20.0
17.5
15.0
15.0
15.0
12.0
16.3
30.0
21.5
31.7
17.6
32.0
19.4
28.8
21.6
29.7
22.7
30.6
23.4
28.8
25.4
28.8
26.0
2010
19,040
16.8
14,953
78.5
4,087
21.5
661
3,426
291
216
3,352
-84
3,436
705
-74
631
18.8
2,805
0
2,805
2,680
2011
21,978
15.4
18,100
82.4
3,878
17.6
626
3,252
391
347
3,208
-168
3,376
751
-15
736
22.9
2,640
0
2,640
2,702
2012
26,961
22.7
21,743
80.6
5,218
19.4
817
4,400
395
445
4,451
863
3,588
690
40
730
16.4
2,858
23
2,835
3,287
2013
32,120
19.1
25,190
78.4
6,930
21.6
830
6,100
340
430
6,190
370
5,820
1,732
-262
1,470
23.8
4,350
20
4,330
4,705
2014
41,840
30.3
32,326
77.3
9,514
22.7
870
8,644
586
381
8,439
0
8,439
2,246
-445
1,801
21.3
6,638
0
6,638
5,362
2015E
46,849
12.0
35,869
76.6
10,980
23.4
1,890
9,090
1,840
2,310
9,560
0
9,560
2,044
0
2,044
21.4
7,516
0
7,516
6,981
2016E
57,236
22.2
42,727
74.7
14,509
25.4
2,318
12,191
2,198
900
10,893
0
10,893
2,233
0
2,233
20.5
8,660
0
8,660
8,606
Income Statement
Y/E March
Net Sales
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
PBT before EO Expense
EO Expense/(Income)
PBT after EO Expense
Current Tax
Deferred Tax
Tax
Tax Rate (%)
Reported PAT
Less: Minority Interest
Net Profit
Adj PAT
29 January 2015
(INR Million)
2017E
66,578
16.3
49,301
74.1
17,277
26.0
2,491
14,786
2,018
950
13,719
0
13,719
2,812
0
2,812
20.5
10,906
0
10,906
10,838
12
Torrent Pharmaceuticals
Financials and valuations
Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred liabilities
Total Loans
Capital Employed
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
Loans & Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
(INR Million)
2010
423
7,887
8,310
0
499
5,224
14,033
5,411
1,098
1,412
11,607
3,236
2,982
3,883
1,506
5,496
4,216
1,280
6,111
14,033
2011
423
9,801
10,224
16
480
5,720
16,440
6,355
1,799
1,460
15,742
5,048
3,404
4,788
2,502
8,916
7,490
1,427
6,826
16,440
2012
423
11,515
11,938
35
514
5,786
18,274
7,968
1,188
1,240
20,081
5,315
5,228
6,743
2,795
12,202
10,395
1,807
7,878
18,274
2013
423
13,796
14,219
4
257
7,030
21,510
8,198
2,853
605
25,872
9,239
6,878
6,270
3,485
16,017
12,297
3,720
9,855
21,510
2014
846
18,178
19,024
4
-182
11,418
30,264
8,753
5,341
1,857
34,091
10,061
10,994
7,694
5,342
19,777
16,239
3,538
14,314
30,265
2015E
846
23,441
24,287
4
275
25,418
49,983
30,978
3,171
1,857
33,217
10,456
9,838
7,047
5,876
19,299
13,924
5,375
13,918
49,923
2016E
846
29,061
29,907
4
275
23,418
53,604
31,702
2,085
1,857
39,687
12,012
12,020
9,192
6,463
21,787
15,992
5,796
17,900
53,544
2017E
846
36,139
36,986
4
275
21,418
58,682
32,732
1,543
1,857
47,729
13,973
13,981
12,665
7,110
25,239
18,597
6,642
22,490
58,622
2010
2011
2012
2013
2014
2015E
2016E
2017E
15.8
20.5
49.1
6.0
21.1
16.0
19.3
60.4
8.0
29.8
19.4
21.6
70.5
8.5
29.2
27.8
30.5
84.0
23.0
52.3
31.7
44.4
112.4
10.0
29.8
41.3
55.6
143.5
13.3
35.1
50.9
64.9
176.7
15.4
35.1
64.0
79.2
218.6
19.3
35.1
35.9
25.6
10.1
4.7
20.6
0.9
27.6
20.5
7.9
4.5
19.2
1.2
22.4
17.5
6.4
3.6
14.3
1.3
17.8
14.4
5.2
3.0
11.7
1.7
E: MOSL Estimates
Ratios
Y/E March
Basic EPS (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Fixed Asset Turnover (x)
Debtor (Days)
Inventory (Days)
Working Capital Turnover(Days)
Leverage Ratio (x)
Interest Cover Ratio
Debt/Equity
29 January 2015
36.2
29.3
29.2
24.4
29.7
28.8
36.0
33.5
32.3
34.9
32.2
28.4
31.8
25.4
32.4
28.2
3.6
56
62
43
3.7
55
84
34
3.8
71
72
15
4.0
78
105
41
4.9
96
88
58
2.4
77
81
54
1.8
77
77
56
2.1
77
77
54
11.8
0.6
8.3
0.6
11.2
0.5
17.9
0.5
14.7
0.6
4.9
1.0
5.5
0.8
7.3
0.6
13
Torrent Pharmaceuticals
Financials and valuations
(INR Million)
Cash Flow Statement
Y/E March
Oper. Profit/(Loss) before Tax
Interest/Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
2010
4,087
216
-716
349
3,937
2011
3,878
347
-755
190
3,660
2012
5,218
445
-696
902
5,869
2013
6,930
430
-1,728
-2,449
3,183
2014
9,514
381
-2,239
-3,034
4,622
2015E
10,980
2,310
-1,588
-252
11,450
2016E
14,509
900
-2,233
-1,837
11,340
2017E
17,277
950
-2,812
-1,117
14,297
EO Expense / (Income)
CF from Operating incl EO Expense
-84
4,021
-168
3,828
863
5,006
370
2,813
0
4,622
0
11,450
0
11,340
0
14,297
-1,487
-17
-1,504
-2,214
-48
-2,262
-1,736
220
-1,516
-2,460
636
-1,825
-3,904
-1,252
-5,156
-21,665
0
-21,665
-1,957
0
-1,957
-2,979
0
-2,979
0
398
-291
-592
-449
-934
0
512
-391
-787
5
-661
0
85
-395
-836
-390
-1,535
0
1,212
-340
-2,273
-61
-1,462
423
4,388
-586
-1,980
-286
1,959
0
14,000
-1,840
-2,638
45
9,567
0
-2,000
-2,198
-3,040
0
-7,237
0
-2,000
-2,018
-3,828
0
-7,846
1,583
2,300
3,883
905
3,883
4,788
1,955
4,788
6,743
-473
6,743
6,270
1,425
6,270
7,694
-647
7,694
7,047
2,145
7,047
9,192
3,473
9,192
12,665
(inc)/dec in FA
(Pur)/Sale of Investments
CF from Investments
Issue of shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
29 January 2015
14
Torrent Pharmaceuticals
NOTES
29 January 2015
15
Torrent Pharmaceuticals
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TORRENT PHARMACEUTICALS LTD
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16