Torrent Pharmaceuticals - Buy stock recommendation

Investment research report with "Buy stock recommendation" from Kotak Securities.

Reco price: Rs 122
Current market price: Rs 124
Target price: Rs 222
Upside: 79.0%
Brokerage: Kotak Securities

Torrent Pharmaceuticals expects the growth momentum in the Brazilian markets to continue in the near-to-medium term, led by improved sales force productivity and new product launches. TPL has a strong product development pipeline for the Brazilian and other Latin American markets.

TPL, so far, has filed 16 ANDAs and 10 DMFs with the USFDA as part of its US product pipeline and has received approval for five ANDAs. It has around 35 ANDA under development pipeline.

As per the long-term contract manufacturing and supply agreement, TPL supplies insulin to Denmark based Novo Nordisk. In FY08, revenues from the contract manufacturing segment grew by 25.8 per cent to Rs 149 crore (11 per cent of total sales). The company has increased insulin capacities at an investment of around Rs 40 crore.

This business is expected to do well and provide constant cash flow to the company. In order to support the strong growth in the domestic and similar markets, the company is setting up new manufacturing units in Baddi and Sikkim. The company will get fiscal benefits in the form of excise and income tax exemption for ten years. At Rs 122, the stock is trading at 5.5xFY09E and 4.9xFY10E earnings. Maintain accumulate.
Source: Business Standard