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Consolidating Gains

Torrent Pharmaceuticals has six brands among the top 300 pharma brands in India and is also witnessing strong growth momentum in the US

We had recommended Torrent Pharmaceuticals because despite its medium size, Torrent packed a punch. It ranked no. 2 in the cardiovascular and number four in the neuro-psychiatry segments in the country and had six brands among the top 300 pharma brands in India. The company was also witnessing strong growth momentum in the US.

The acquisition of Elder Pharma's domestic business in December 2013 for ₹2,000 crore has brought a host of drugs to Torrent; the prized being Shelcal, a calcium product that commands 79 per cent volume market share in the domestic market. Torrent is still in the process of assimilating Elder and the results have started showing with portfolio growth of 3.6 per cent (YOY) in Q2FY15.

Outlook
Torrent's margins at the time of our recommendation stood at 21.8 per cent. The latest results for Q2 reported margins of 22.4 per cent. Further improvement in the performance of the Elder portfolio should help the company sustain margins. According to Ambit Research, Torrent could see a 617 basis point expansion in EBITDA marginse. Buy.

Gain of 227 per cent at market price of ₹1,188. Recommended in January 2013 at ₹363.