Drug firm Torrent Pharmaceuticals has reported a near three percent rise in consolidated net profit to Rs 330 crore for the quarter ended June 30. It had reported a net profit of Rs 321 crore in the previous year.

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Its consolidated revenue from operations rose four percent to Rs 2,134 crore from Rs 2,056 crore a year ago. Its Indian operations also grew by 18 percent at Rs 1,093 crore in Q1 FY22.

The company earnings before interest, tax, depreciation, and amortisation (EBITDA) margin rose 200 basis points to 34 percent, YoY.

Highlights of the Q1 result

-- According to Torrent Pharma, their US business stabilised at Rs 266 crores for the second consecutive quarter. Sales were lower due to price erosion in base business and lack of new approvals pending re-inspection of facilities

-- In the coming quarters, double-digit growth is likely from most major markets - India, Brazil, and Germany

-- India revenues grew by 18 percent to Rs 1,093 crore

-- Brazil revenues were at Rs 153 crore, up by 9 percent

-- Germany revenues grew 5 percent to Rs 260 crores

-- Gross margin tumbled 25 basis points due to export incentives and high base of the first quarter

Here's what brokerages said about Torrent Pharma’s stock and Q1 results:

Yes Securities

According to the brokerage, Torrent has dodged further erosion in the US markets when other players seem to have suffered. Its US sales were in line with the brokerage's expectations. And it continues to expect double-digit growth from other key markets such as India, Brazil, and Germany, the brokerage said in a note.

Torrent's foray into the trade generics should not dilute its margin over the next two years, the brokerage said, adding "at least as the business would remain subscale and unlikely to cannibalize chronic portfolio."

Trade generic is an unbranded form of medicine sales, these drugs are copycats of innovator drugs after the patents expire. These drugs are pushed directly to the distributor and not marketed through medical representatives.

The brokerage expects the margin to increase for the current year, better than it envisaged, in contrast with similar players in the market.

On this increased margin assumption, Yes Securities has reiterated a 'buy' rating to the stock, with a target price of Rs 3,200.

CLSA

The brokerage has a 'buy' rating on the stock with a target price of Rs 3,650.

It said that despite the company's normalised selling, general, and administrative costs (SG&A costs), its EBITDA stood at 7 percent. It was driven by the positive surprise on the margins, the brokerage said.

Its PAT took a beat due to the higher tax rate, but its India business grew healthily, the brokerage said. "Improving outlook for Brazil and the EU, along with steady growth in India, are the key earnings drivers," the brokerage said in a morning note.

It has tweaked the FY22-24 EPS estimates 6-7 percent to pencil in the higher tax-rate guidance, offset by a rollover to June-23 CL EPS.

JPMorgan

The brokerage has a ‘neutral’ rating on the stock with a target price of Rs 2,750 per share. It said the key surprise in the company's quarterly earnings was the low SG&A cost as compared to Q1 FY21. This combined with MR productivity indicates a limited lever for margins, the brokerage said.

India growth momentum is crucial for the stock given its premium valuation, the brokerage said. It is neutral on the stock and has given it a target price of Rs 2,750 per share.

Credit Suisse

Credit Suisse has an 'underperform' call on the stock with a target price of Rs 2,655 per share. According to the brokerage, Torrent Pharma reported a miss in the first quarter with the revenue/EBITDA/PAT coming lower by 8/6/14 percent as compared to its estimates.

It further said that the current financial year will create a high base for India and cut our FY23 growth rates marginally.

The brokerage has cut the EPS for FY22/23 by 8/10 percent on higher tax rates.

Anand Rathi

The brokerage has maintained its 'buy' rating on the stock with a higher target price of Rs 3,664 at 20 times the forward estimates of FY23 EV/EBITDA.

The continued growth pace in India and Brazil-branded-generics markets and stability in the US would aid 11.8 percent growth in revenue, the brokerage said. "Greater MR productivity in India and re-initiating supplies from key US sites would ensure margin expansion," it added.

However, it sees pricing risk in its domestic portfolio, with currency fluctuations and regulatory issues at plants that can also impact the stock negatively.

At 12:30 IST, the stock was trading nearly three percent higher at Rs 3,083 on BSE.