1. Torrent Pharmaceuticals shares gain despite 55% fall in Q1 net profit; should you buy,sell or hold?

Torrent Pharmaceuticals shares gain despite 55% fall in Q1 net profit; should you buy,sell or hold?

Torrent Pharmaceuticals shares gained nearly 2 per cent on Thursday despite the drug company posted 55.08 per cent fall in consolidated net profit at Rs 292 crore for the first quarter ended June 30, 2016 against Rs 650 crore in the same quarter last year.

By: | New Delhi | Updated: July 28, 2016 4:36 PM
Pharma stocks bse sensex torrent pharma Torrent Pharmaceuticals shares gained nearly 2 per cent on Thursday despite the drug company posted 55.08 per cent fall in consolidated net profit at Rs 292 crore for the first quarter ended June 30, 2016 against Rs 650 crore in the same quarter last year.(Reuters)

Torrent Pharmaceuticals shares gained nearly 2 per cent on Thursday despite the drug company posted 55.08 per cent fall in consolidated net profit at Rs 292 crore for the first quarter ended June 30, 2016 against Rs 650 crore in the same quarter last year. Consolidated total income from operations of the company slid to Rs 1,545 crore for the quarter under review against Rs 1,947 crore in the same quarter last year.

Operating profit of the company declined by 53.09 per cent year-on-year to Rs 463 against Rs 987 crore in the same quarter last year. Torrent Pharmaceuticals Q1FY17 results were impacted largely on account of fall in the US business (51 per cent YoY), which stood at Rs 434 crore as against Rs 888 crore in Q1FY2016.

According to a brokerage firm Sharekhan, growth of Torrent Pharma over the next two years will be driven by new product launches; approximately 8-10 products will be launched in 2016-17 and 2017-18. However, the brokerage house expects margin to remain under pressure going forward due to competitive scenario in the US for its base business and higher R&D expenditure (from 4-8 per cent of sales). Tax rate will be around 23 per cent.

Post Q1 results, Sharekhan maintained ‘Hold’ rating on the pharma company with target price of Rs 1,525.

Karvy Stock Broking also maintained ‘Hold’ on the stock with a price target of Rs 1,600.

Nomura in a research report said, “Sales and EBITDA of Torrent Pharma stood below our expectations.” However, the Japanese brokerage house maintained ‘Buy’ on the shares with target price of Rs 1,666.

Shares of the company closed 1.88 per cent up at Rs 1435.65 on Thursday.

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