In 4QFY18, Torrent’s revenues grew 20% YoY to Rs 17,22 crore beating estimates by 5 %. Growth was mainly driven by strong growth across India. Lower raw material cost and higher contributions for the domestic market resulted in gross margin improving by 729bps YoY to 73.1%. Consequently, EBITDA margin increased 57 bps YoY to 21.1% translating into EBITDA growing 23% YoY to Rs 3,64 crore. Adjusted for a one –off charge, EBITDA margins were extremely healthy @ 24.1%. PBT declined 45% YoY to Rs 1,34 crore mainly due to higher depreciation and interest expense on account of intergration with Unichem despite which PAT increased 11% YoY to Rs 2,28 crore.(utilization of certain Deferred Tax assets).
Domestic formulation sales India sales grew by a strong 48% YoY to Rs 693 crore. The quarter included a one off charge of Rs 50 crore relating to certain SG&A expenses. The Unichem acquisition was completed on 14 Dec’17 and had a marginal contribution during the quarter, excluding which Torrent grew 8% YoY. The contribution of the domestic business in total revenue has gone up by 539 bps yoy to c40% in Q4FY18.
The management expects full Unichem integration to be completed by March 19, which is ahead than the anticipated timelines of 18 months communicated at the time of the transaction. While the Unichem secondary sales declined 2% in FY18 and 1% in 4QFY18, sales have started picking up in April18 aided by price hikes. Attrition rate too has dropped to 18% in 4QFY18 vs. 35-40% levels pre-Torrent acquisition.
The management is now focusing on restructuring of divisions, which should result in further rationalisation of field force, which coupled with increasing sales, will drive improvement in MR productivity. Gross margins are also expected to improve driven by joint purchasing of raw materials at favourable prices. US business recorded revenues of Rs 307 crore up 10% YoY. The US business is expected to stabilise around $200 million for FY19. The quarterly run rate was around $48 million.