1. 🧠 At a Glance
Torrent Pharma is the Torrent Group’s most profitable unit — manufacturing branded generics in India, Brazil, and Germany. It boasts top-tier margins and 27% ROCE. But here’s the warning label: sales growth is just 8% CAGR, valuation is spicy at 58x P/E, and debt’s still there. The business is solid, but the stock… is it overdosing?
2. 🎬 Introduction with Hook
There are two kinds of medicines — those that heal and those that cost your kidney. Torrent Pharma, at ₹3,314 per share and a 58.6x P/E, sits somewhere in between.
It’s got:
💊 Branded generics that sell like hotcakes in India and Brazil
📈 Margins that rival premium MNCs
📉 But growth that’s — dare we say — a little pain relief spray level weak
3. 🏭 Business Model (WTF Do They Even Do?)
Torrent focuses on branded generics — where you slap a brand name on an off-patent molecule and sell it like luxury toothpaste.
| Segment | Contribution | Focus Geographies |
|---|---|---|
| Branded Generics | 74% | India, Brazil, Germany |
| Contract Manufacturing + Others | 26% | U.S., Europe, Others |
Key therapeutic areas:
🫀 Cardiovascular
🧠 CNS
💊 Gastro
🩹 Pain, Diabetes, Gynae
Basically, they make the drugs most Indian dads take after reading smallcap WhatsApp groups.
4. 💰 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 8,005 | 8,508 | 9,620 | 10,728 | 11,516 |
| Net Profit (₹ Cr) | 1,252 | 777 | 1,245 | 1,656 | 1,911 |
| EPS (₹) | 37.0 | 23.0 | 36.8 | 48.9 | 56.5 |
| OPM (%) | 31 | 29 | 30 | 31 | 32 |
| ROE (%) | 36.9 | 22.9 | 36.5 | 25.5 | 27.0 |
Growth is real, especially in profit, but not aggressive enough to justify a tech-style valuation.
5. 📊 Valuation – Is It Cheap, Meh, or Crack?
- P/E: 58.6x
- P/B: 14.8x
- PEG (approx): ~2.7
- Div. Yield: 0.97%
- 5Y Profit CAGR: 14%
- ROE: 27%
💉 Verdict? Expensive even for a pharma name with strong cash flows. Valuation is pricing in “Sun Pharma” growth — but this is more “Sunlight Detergent” pace.
6. 🍿 What’s Cooking – News, Triggers, Drama
- 🛍️ Acquisition Mode: Just bought 2.41% in JB Chemicals for ₹620 Cr — strategic or trophy asset?
- 🧪 R&D ramping: Management highlighted ~9% of sales being spent on R&D
- 🔻 Interest cost falling: From ₹354 Cr to ₹252 Cr in 2 years = deleveraging
- 📈 Brazil and Germany growing steadily, but U.S. still lukewarm
7. 🏗️ Balance Sheet – How Much Debt, How Many Dreams?
| FY | Borrowings (₹ Cr) | Networth (₹ Cr) | D/E |
|---|---|---|---|
| FY21 | 4,874 | 5,838 | 0.83 |
| FY23 | 5,369 | 6,198 | 0.87 |
| FY25 | 3,202 | 7,590 | 0.42 ✅ |
🚀 Debt down by ₹2,100 Cr in 2 years — a clean-up that deserves applause.
8. 💵 Cash Flow – Sab Number Game Hai
| FY | CFO (₹ Cr) | Capex (₹ Cr) | FCF |
|---|---|---|---|
| FY23 | 2,368 | -2,335 | ~₹33 Cr |
| FY24 | 3,266 | -160 | ₹3,106 Cr |
| FY25 | 2,585 | -549 | ₹2,036 Cr |
Strong cash engine. FY24 was blockbuster. FY25 saw return to normal.
9. 📐 Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE (%) | 20 | 23 | 27 ✅ |
| ROA (%) | 13 | 14 | 13 |
| Working Cap Days | 74 | 53 | 66 |
| OPM (%) | 30 | 31 | 32 |
| D/E | 0.87 | 0.59 | 0.42 ✅ |
This is one of the cleanest, most stable ratio tables in Indian pharma. Respect.
10. 💸 P&L Breakdown – Show Me the Money
| FY25 (₹ Cr) | Amount |
|---|---|
| Revenue | 11,516 |
| Op Profit | 3,721 |
| Other Income | -1 (meh) |
| Interest | 252 |
| Depreciation | 795 |
| PBT | 2,673 |
| PAT | 1,911 |
Margins hitting 32% now — and not from cost-cutting, but solid topline.
11. ⚔️ Peer Comparison – Who Else in the Game?
| Company | P/E | ROE (%) | OPM (%) | 5Y Sales CAGR |
|---|---|---|---|---|
| Torrent Pharma | 58.6x | 27 | 32 | 8% |
| Sun Pharma | 35x | 16.8 | 28.8 | 7% |
| Cipla | 23x | 17.7 | 25.9 | 9% |
| Zydus | 21x | 21.3 | 30.3 | 8% |
| Mankind | 53x | 16.7 | 24.7 | 10% |
| Divi’s | 82x | 15.4 | 31.7 | 6% |
Torrent is a margin king. But also priced like royalty. 👑
12. 🧾 Miscellaneous – Shareholding, Promoters
- Promoter holding: 68.31% (stable)
- FIIs rising steadily — 10.8% → 16.3% in 2 years
- Public holding shrinking — retail is booking profits
- ~86,000 shareholders. Not mass retail owned (yet)
13. 🧑⚖️ EduInvesting Verdict™
🩺 Torrent is fundamentally fit, but valuation ka BP thoda high hai.
- 💊 Great ROCE, stable cash flows, clean balance sheet
- 😐 But revenue growth is mid-single digit
- 🔥 And P/E of 58x is pricing in a growth spurt that hasn’t arrived yet
Would you buy Crocin for ₹1000 per strip just because it’s high margin? No. That’s the dilemma.
🎯 Fair Value Range (EduInvesting POV):
₹2,200 – ₹2,600 per share
(Assuming 18–20% PAT CAGR over FY25–27 and 30–35x fair P/E range for a high-quality mid-growth pharma)
📌 Tags: Torrent Pharma share analysis, Indian pharma stocks, JB Chemicals acquisition, pharma stock fair value, branded generics India, EduInvesting pharma
✍️ Written by Prashant | 📅 12 July 2025
