Torrent Pharma shares drop 4% amid block deal; promoter likely seller
Shares of Torrent Pharma tumbled nearly 4% in intraday trade on Wednesday amid a surge in selling activity. The counter witnessed strong volume as more than 1 crore shares, representing over 3% stake, changed hands via block deal in the first two hours of trade, compared with a two-week average of 4,628 stocks. The block deal size is reported to be around ₹3,240 crore at an average price of ₹3,108 apiece, a discount of 3% over Tuesday’s closing price. The names of buyers and sellers were not known immediately but it was reported that promoter Torrent Investments, which holds a 71.25% stake in Torrent Pharma, was looking to trim its stake in the company.
At the time of reporting, Torrent Pharma shares were trading 2.24% lower at ₹3,139, with a market capitalisation of ₹1.06 lakh crore. The pharma heavyweight opened lower for the third straight session at ₹3,130.10, down 2.5% against the previous closing price of ₹3,210.95 on the BSE. During the session so far, the counter has fallen as much as 3.9% to ₹3,084.80 apiece.
The stock has been reeling under stress for three sessions and lost over 10% during this period as investors booked profit at higher levels. The counter touched its 52-week high of ₹3,589.95 on October 10, 2024, nearly doubling from its 52-week low of ₹1,912.50 on November 1, 2023.
The development came days after Torrent Pharma released its earnings report for the second quarter ended September 30, 2024. The Ahmedabad-based company reported a 17.4% year-on-year (YoY) increase in consolidated net profit at ₹453 crore for Q2 FY25, as compared to ₹386 crore in the year-ago period.
For the July-September quarter, revenue from operations rose 8.6% to ₹2,889 crore from ₹2,660 crore in the corresponding period of the last fiscal. India business contributed 56.5% of the total revenue at ₹1,632 crore, which rose by 13% led by outperformance in focus therapies. In the overseas market, the company generated ₹263 crore revenue from Brazil, ₹288 crore from Germany, and ₹268 crore from United States.
At the operating level, EBITDA grew 13.8% to ₹939 crore versus ₹825 crore in the year-ago period. The margin stood at 32.5% during the quarter under review as compared to 31% in Q2 of the previous fiscal.
As per the company, insulin revenues were impacted this quarter due to scheduled shutdown taken in the month of August for maintenance activities. “The facility will be released for manufacturing in December. Shortfall is significantly planned to be recovered in Quarter 4 of this year and consequently there will not be any impact on a full year basis,” the release noted.
Post Q2, brokerage house Centrum downgraded the stock to ‘Add’ with a target price of ₹3,350 per share, saying that majority of the positives have already factored in the current price. “We remain positive on the company on the back of a) sustained outperformance of DF business led by robust growth in key brands such as Shelcal/Tedibar, increased MR productivity and scale-up of consumer health portfolio b) growth in Brazil/Germany segment, and c) US ramping-up meaningfully over the next 2-3 years. We expect revenue/EBITDA/EPS CAGR of 14%/18%/39% with margins expanding 220bp to 33.6% over FY24-26,” it says in a report.
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