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Torrent Pharmaceuticals Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤7th Nov 25

Summary : Torrent Pharma delivered robust Q2 FY'26 results driven by strong branded markets in India and Brazil, while navigating supply disruptions in Germany and strategic investments in US generics and new product launches like Semaglutide.

Management Perspective positive : "We continue to see robust performance in our branded markets.""We are hopeful that the high growth may continue for the rest of the financial year.""It is a major opportunity. It's probably a very important opportunity.""Overall, the business is healthy.""The optimism is essentially directed towards that and nothing beyond that that we're looking at investing."

Concall Report Analysis & Insights

Business Overview

  1. Q2 FY'26 revenues grew 14% to Rs. 3,302 crores.
  2. Operating EBITDA increased 15% to Rs. 1,083 crores, with a 32.8% margin.
  3. Branded markets contributed 73% of revenue, with India growing 12% and Brazil 21%.
  4. US generics business grew 26%, while Germany declined 5% due to supply issues.
  5. Net debt to EBITDA leverage stands at 0.45x.

Future Growth Prospects

  1. India business is expected to continue outperforming market growth, focusing on chronic therapies.
  2. Field force expansion is on track to reach 7,000 reps by year-end.
  3. Curatio business is expected to maintain high growth for the rest of the financial year.
  4. Brazil has a pipeline of 65 molecules awaiting ANVISA approval.
  5. Semaglutide launch in Brazil and India is a significant growth opportunity.

Management Insights

  1. Robust performance seen in branded markets, especially India and Brazil.
  2. Curatio business shows strong demand generation from ad spends and field force expansion.
  3. Semaglutide is a major opportunity, targeting 10-15% market share in Brazil.
  4. India's volume growth outperformance is driven by chronic divisions and new launches.
  5. US R&D engine is ramping up, expecting 10-15 ANDA filings annually in future years.

Signs of Skepticism

  1. Management is vague on Semaglutide approval timelines in Brazil due to ANVISA uncertainty.
  2. Resolution of Germany's supply disruption is not definitively guaranteed beyond Q3.
  3. Uncertainty surrounds the exact timing of Semaglutide market formation in India due to ongoing litigation.
  4. The US generic business has faced a 'dry spell' of launches, impacting profitability.

Risk Factors

  1. Germany business growth is impacted by third-party supplier disruption, expected to continue into Q3.
  2. Uncertainty exists regarding ANVISA approval timelines for Semaglutide in Brazil.
  3. Litigation is ongoing for Semaglutide in India, delaying market formation.
  4. US generic business profitability has been impacted by a prolonged period of no new launches.
  5. Working capital was affected by GST implementation and extended credit periods.

Good To Know

  1. Competition Commission of India and South Africa approved the JB Pharma acquisition.
  2. SEBI approval received for minimum tender offer for JB Pharma, closing by December 15th.
  3. India's Q2 growth was 12% (volume 3.7%, price 5.5%, new products 3%) versus IPM growth of 8%.
  4. GST impact on India business was minimal, about 0.5%.
  5. The company plans to enter one new therapeutic area in India this quarter.

Key Drivers

  1. JB Pharma acquisition closing soon.
  2. Semaglutide launch in Brazil and India.
  3. India chronic business outperformance.
  4. US generic filings ramping up.

Key Analyst Discussions

Market Trends & Consumer Behavior

  1. India's chronic business outperformance is driven by cardiac and gastro segments.
  2. Semaglutide market potential may be higher than expected based on Mounjaro's rapid take-off.
  3. Pricing growth in India is expected to remain in the 5.5% range for the next couple of years.

Financial Highlights

  1. Working capital saw deterioration due to GST-related credit period extensions.
  2. Payables decreased due to accelerated insurance discounts in Germany.
  3. Total CAPEX for FY'26 is projected around Rs. 300 crores.
  4. Average annual CAPEX for the next three years is expected to be Rs. 250-300 crores.
  5. R&D spend as a percentage of sales is expected to be 5-5.5% in Q3/Q4.

Product Composition

  1. Key Indian brands like Cardiac, Gastro, and Derma (including Curatio) showed strong growth.
  2. Brazil's growth is driven by new product launches and volume pickup in existing mega brands.
  3. Focus therapy areas for Brazil launches include CNS, Cardio, and new diabetic products.
  4. US generic filings are ramping up, targeting 10-15 ANDAs annually in future years.

Strategic Considerations

  1. Operational control of JB Pharma is expected by January 2026, with synergy details to follow.
  2. Semaglutide will be launched in both injectable and oral versions within the next financial year.
  3. No plans to exit the US generic market; focus is on returning to sustainable profitability.
  4. Field force expansion is across cardiac, gastro, diabetes, derma, and pain management divisions.
  5. GLP-1 launches in Brazil will utilize existing diabetes/cardio teams, with future expansion possible.
Torrent Pharmaceuticals Ltd (TORNTPHARM) Concall Report Analysis & Insights | Dhanarthi