What are the future prospects of Torrent Pharmaceuticals?
-Ashok
Torrent Pharmaceuticals profits surge with over 20 per cent return on net worth and return on capital employed over the past five years. The company is a leader in the cardiovascular and central nervous system segments that are fast growing and lucrative. It has six strong brands that have paved way for growth such as Domstal and Droxyl according to the ORG list of top 300 pharma brands in India.
Torrent has established itself in large international markets like Brazil and Germany and its investments in global operations have started to pay off with profit margins expected to expand as operations scale up. The company is expecting healthy growth in revenues in the US and Europe which will get augmented with its entry into one of the largest branded generics markets like Mexico.
The company witnessed muted growth in business over last four quarters due to overall slowdown and increasing competition in the acute anti-infective and gastro-intestinal segments. But over the past five years, it posted a 35.7 per cent EPS growth resulting in attractive PEG of 0.5, with the stock's current PE at a premium of 9.3 per cent to its five-year median PE of 15.96. Although the company's valuations look stretched in PE terms; increased insulin manufacturing capacity for Novo-Nordisk, supplies for AstraZeneca and other MNCs are key long term triggers to watch out for during FY12-14.
This article was originally published on April 02, 2012.
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