Why did the stock of Torrent Pharma fall after the Q3 results?

The pressure on the Torrent Pharma stock was due to lower profits in the quarter, but we will come back to that later. Let us first look at the top line story of Torrent Pharma Ltd. The company reported 5.66% growth sales for Dec-21 quarter on consolidated basis at Rs.2,108 crore. However, the momentum was weak as evidenced by the -1.36% fall in sales on a qoq basis.

During the quarter, India revenues grew robust at 15% to Rs.1,072 crore while Brazil revenues also grew by 5% at Rs.183 crore. Problem was with the US revenues which was down 2% at Rs.435 crore due to delays in re-inspection post-pandemic and pricing pressures in the US; which caused the profit fall. German revenues were down 1% at Rs237cr. Nearly 75% of revenues of Torrent Pharma are from India; in the chronic / sub-chronic categories.

Problem was in bottom line. PAT for Dec-21 quarter was down -16.16% at Rs.249 crore due to pressure on sales, price and profits in the US business. EBITDA was down 5% at Rs.585 crore while the EBITDA margins came in at 28% for the quarter. R&D spends were healthy at Rs.123 crore or around 6% of sales. US sales came under strain due to pricing pressure and delays in re-inspection. Net margins tapered from 14.89% in the Dec-20 quarter to 11.81%.