GuruFocus -
- Total Revenue: INR2,889 crores, up by 9%.
- Operating EBITDA: INR939 crores, up by 14%.
- Operating EBITDA Margin: 32.5%.
- India Revenue: INR1,632 crores, growth of 13%.
- Brazil Revenue (Constant Currency): BRL174 million, growth of 17%.
- Germany Revenue (Constant Currency): EUR31 million, growth of 6%.
- US Revenue (Constant Currency): USD32 million, growth of 7%.
- Net Debt to EBITDA: Less than 0.5x.
- Outlets Coverage: Expanded to 72,000 outlets from 68,000 in Q1.
- Field Force: Increased to 6,000 from 5,700 in the previous quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Torrent Pharmaceuticals Ltd (BOM:500420) reported a strong performance in its branded businesses, which accounted for 74% of the overall revenue this quarter.
- The India business grew by 13% this quarter, outperforming the Indian Pharmaceutical Market (IPM) growth of 8%.
- The company's operating EBITDA increased by 14% to INR939 crores, with an operating EBITDA margin of 32.5%.
- The Brazil business showed a robust 17% growth in constant currency terms, driven by new product launches.
- The company has expanded its consumer health business coverage to 72,000 outlets, up from 68,000 in the previous quarter, indicating a strategic focus on market penetration.
- Insulin revenues were impacted due to a facility shutdown for maintenance, leading to a shortfall of INR40 crores this quarter.
- The US business remains stable but is not expected to ramp up significantly in the short term due to older product filings.
- The company faced a Forex loss included in other income, impacting overall financial performance.
- The US FDA issued a Form 483 with one observation at the Pithampur manufacturing facility, indicating regulatory challenges.
- The volume growth in the India market remains muted, with low single-digit contributions, raising concerns about future growth sustainability.
A: Sudhir Menon, Chief Financial Officer, confirmed that the manufacturing disruption is temporary. The facility is expected to resume operations in December, and the shortfall will be recovered by the fourth quarter, ensuring no impact on the full-year revenue.
Q: What is driving the consistent improvement in gross margins, and can these levels be sustained?
A: Sudhir Menon explained that the improvement in gross margins is due to a higher branded mix in the overall revenue base. The margins are expected to hold at current levels, given the stable branded mix.
Q: What are the key drivers for margin improvement over the next three years?
A: Sudhir Menon highlighted that margin improvements will be driven by price increases in branded businesses and operating leverage. The company expects a 50 to 100 basis point improvement annually, with no major investments anticipated in the branded business.
Q: Can you provide insights into the US business outlook and expected launches?
A: Sanjay Gupta stated that the US business is expected to have stable to slightly increasing revenues, with no significant ramp-up in the short term. The company plans to launch a single-digit number of products, focusing on maintaining current revenue levels.
Q: What is the strategy for expanding the field force in India, and what productivity levels are expected?
A: Aman Mehta mentioned that the field force will be expanded by 100-200 more representatives by the end of the financial year, with productivity expected to increase to INR 9,50,000 to INR 10,00,000 within 18 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.