Accumulate Torrent Pharmaceuticals; target of Rs 3850: Prabhudas Lilladher

Mumbai, July 1, 2025 — Leading brokerage firm Prabhudas Lilladher has initiated coverage on Torrent Pharmaceuticals Ltd with an ‘Accumulate’ rating, setting a 12-month target price of ₹3,850, implying an upside potential of around 12% from its current market price. The bullish stance is backed by the company's robust domestic growth trajectory, promising US portfolio revival, and improving profitability metrics.

Strong India Franchise, Growth Momentum Intact

Torrent Pharma, one of India’s top five pharmaceutical companies by domestic sales, has consistently delivered industry-leading growth in the Indian branded generics segment. The company boasts a well-diversified therapy presence with leadership in cardiology, central nervous system (CNS), gastro-intestinal, and diabetology.

“Torrent’s domestic business continues to outperform the market, driven by a strong brand portfolio, increased MR productivity, and deepening presence in tier 2 and tier 3 cities,” said Prabhudas Lilladher in its note. “We expect India sales CAGR of 9–11% over FY25–FY27, supported by product launches and increased field force efficiency.”

According to the brokerage, Torrent’s Indian operations account for nearly 75% of EBITDA, making it less vulnerable to volatility in international markets, a trend that has hurt other pharma players.

US Market Recovery: A Key Trigger

Torrent’s performance in the US market, which had seen setbacks due to regulatory issues and pricing pressure, is now on a recovery path. The company’s Dahej and Indrad facilities are moving closer to US FDA compliance, with remediation and re-inspection progress reportedly on track.

“US revenues have bottomed out. Torrent is focused on niche, low-competition launches and cost rationalisation in this geography,” the report stated. “With a revamped portfolio strategy and increased filings in dermatology and CNS, we expect the US business to grow at a CAGR of 7–8%.”

Torrent currently has around 50 ANDAs pending approval, and its targeted launch pipeline could significantly boost topline growth if regulatory hurdles are cleared in time.

Margins to Expand, Debt Under Control

Torrent has taken steps to improve its operating margins, which had come under pressure due to inflationary input costs and one-off legal settlements in international markets. With input costs stabilising, operational efficiencies, and a leaner international structure, EBITDA margins are expected to rise to 29–30% by FY27, up from 26.5% in FY24.

On the balance sheet side, the company’s net debt stood at ₹3,600 crore as of FY24, with manageable leverage and consistent free cash flows helping to maintain financial stability.

“Torrent has displayed prudent capital allocation, with controlled capex and strong cash generation,” the note added. “The company is not pursuing aggressive M&A in the near term, focusing instead on organic growth and integration efficiencies.”

Recent Acquisitions and Strategic Focus

The company’s recent acquisition of Curatio Healthcare has started yielding synergistic benefits, especially in the dermatology space. Torrent aims to strengthen its presence in lifestyle and chronic therapies, a high-growth segment within Indian pharma.

“Curatio gives Torrent a significant foot in the high-margin dermatology segment, and we expect meaningful cross-leveraging in FY26,” analysts noted. “This will help offset the slower growth in legacy acute segments.”

Additionally, Torrent is reportedly exploring opportunities in consumer healthcare and digital health solutions, aligning with evolving patient preferences.

Valuation and Recommendation

At the current market price of ₹3,440, Torrent Pharma is trading at 27x FY26E earnings, which Prabhudas Lilladher believes is justified considering its superior domestic growth, margin expansion, and strong cash flows.

“We initiate coverage with an ‘Accumulate’ rating and a target price of ₹3,850, valuing the company at 30x FY26E EPS,” the brokerage said.

The premium valuation reflects Torrent’s brand equity, management pedigree, and strong India-centric revenue model, which continues to provide resilience in times of global uncertainty.

Investor Outlook: Stability with Upside

Torrent Pharma presents an attractive investment case for investors seeking a blend of stability and growth in the healthcare sector. Its focus on chronic therapies, efforts in US revival, and margin tailwinds make it a compelling mid-to-long-term bet.

While near-term upside may be moderate, long-term prospects remain bright, especially if regulatory clearances for US facilities materialise and the domestic growth momentum continues.

However, investors are advised to monitor any adverse regulatory actions, delays in USFDA approvals, and potential competition in core therapy areas.

With a well-diversified portfolio, strong India growth, and improving international performance, Torrent Pharmaceuticals is well-positioned to deliver consistent shareholder value. Prabhudas Lilladher’s coverage reaffirms the stock’s growth potential, backed by fundamentals and operational excellence.

For now, accumulation on dips remains the optimal strategy for those looking to build exposure in high-quality Indian pharma names.