4 November 2020
A
nnual
R
eport
T
hreadbare
TORRENT PHARMACEUTICALS FY20
Torrent Pharma's FY20 Annual Report analysis highlights modest revenue
growth of 3.5%, led by decline in the US (4.2%) and Germany (6.1%).
However, businesses in India/ROW registered growth of 8.8%/12.8%.
EBITDA margins expanded 150bp to 27.3% due to higher gross margins,
lower R&D spends (at 6.2% of revenue v/s 7.0% in FY19), containment of
employee expenses (at 18.0% of revenues v/s 18.3% in FY19) with
reduced manpower (by 750 people), and capitalization of part employee
expenses during upgradation of the Levittown facility. PAT excluding
exceptional items increased 29.2% to INR10.2b, supported by lower ETR
(at 13.6% v/s 22.3% in FY19) due to one-time tax benefit provided
through Coronavirus Aids, Relief and Economic Security Act (CARES) in
the US, certain deductions allowed under the Income Tax Act, and higher
other income at INR1.2b (FY19: INR0.6b) owing to forex gains.
Intangibles, primarily due to acquisitions done in prior years, remained
high at INR45.8b, (33% of total assets (TA) /95% of net worth (NW)).
However, goodwill amongst this is a mere 7.5%, which has been tested
for impairment. Unlike its peers, Torrent amortizes most of the
intangible. Earnings to cash flow conversion declined to 77% on
increased working capital (WC) intensity (primarily inventory). Higher net
profit margin led to rise in ROE to 21% (FY19: 17%).
The
ART
of annual report analysis
EBITDA margins expanded
150bp due to cost synergy
on integration of Unichem
portfolio and higher
employee productivity.
Earnings-to-cash conversion declined to 77% –
the lowest in five years – due to increase in WC
intensity of the business.
Intangibles including goodwill remain high at
INR45.8b (33% of TA/95% of NW).
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
TRP IN
169
436.1 / 5.8
3040 / 1619
-13/-9/43
1517
28.8
Muted operating performance:
EBITDA grew 9.4% to INR21.7b
as revenue inched up a mere 3.5% to INR79.4b. EBITDA margin
expanded by 150bp to 27.3%. We note that over FY15-20,
revenues have posted 11.3% CAGR, largely led by acquisitions.
While revenue/EBITDA grew exponentially in the years after
the acquisition (FY16 and FY19), the same remained muted
post those years (FY17 and FY20).
Earnings to cash conversion declines:
Earnings to cash
conversion declined to 77% (lowest in five years) due to
increased investment of INR3.9b in WC (v/s release of INR1.0b
in FY19), which led to 30% decline in operating cash flows post
interest to INR9.1b (FY19: INR12.9b). Cash conversion cycle
(CCC) rose by 47 days to 88 days in FY20, majorly due to (a)
11% increase in inventory levels to INR21.5b, leading to
increase in inventory days to 362 (FY19: 318), and (b) increase
in trade receivables by 14.8% to INR16.5b, leading to rise in
receivables days to 76 (FY19: 68).
Intangibles remain high:
Torrent’s intangibles remain high at
INR45.6b. It mainly consists of brands and product licenses
acquired. However, Torrent’s accounting of intangibles seems
conservative as over the last five years, it has amortized
intangibles at 8.0% (average), higher than most of its peers.
Leverage moderates:
Torrent’s gross borrowings reduced by
3.3% to INR58.4b in FY20 (v/sINR60.4b in FY19) while net debt
increased to INR51.9b (v/s 49.1b in FY19).Net D/E increased to
1.1x from 1.0x in FY19.
Cash tax significantly exceeds tax expense recognized:
The cash
tax paid (INR2.8b) remains higher than the tax expense
recognized in P&L (INR1.7b) on account of recognition of
deferred tax assets, which stood at INR4.3b, 9% of NW.
Shareholding pattern (%)
As on
Promoter
DII
FII
Others
Sep-20
71.3
8.4
12.2
8.1
Jun-20
71.3
9.7
11.0
8.1
Sep-19
71.3
13.1
7.7
8.0
Stock Performance (1-year)
Auditor’s name
BSR & Co LLP
Kirit Mehta & Co
M C Gupta & Co
Research analyst
Sandeep Ashok Gupta
(S.Gupta@MotilalOswal.com)
Umesh Jain
(Umesh.Jain@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
ART
|
Torrent Pharmaceuticals FY20
Decline in the US/Germany leads to subdued performance
EBITDA grew 9.6% to
INR21.7b as revenue grew a
modest 3.5%, while EBITDA
margin expanded by 150bp
on the back of cost synergy
on Unichem’s integration
and higher employee
productivity.
Revenue for the consolidated entity grew a modest 3.5% to INR79.4b (FY19:
INR76.7b), led by 4.2% decline in the US business and 6.1% fall in the Germany
business. The US and Germany businesses contributed 19.2% and 11.9% toward
FY20 revenue, respectively. India/ROW businesses grew 8.8%/12.8%.
EBITDA margin expanded to 27.3% (FY19: 25.8%) on the back of higher gross
margin of 72.7% (FY19: 71.1%) and lower R&D cost. This, however, was partially
offset by higher operative and administrative costs.
Margin expansion was driven by cost synergies from integration of Unichem
portfolio and higher productivity, per capita per month (PCPM) which increased
to INR7.3lakhs v/s INR6.2lakhs in FY19.
Due to reduction of 749 employees, Personnel costs have remained muted at
INR14.3b (FY19: INR14.0b). However, per employee cost has increased to
INR1.1m (FY19: INR1m), majorly due to increments or reduction of employees
with lower salary base.
Management in 4QFY20 con call had highlighted that, a part of salary expenses
owing to the US manufacturing facility (Levittown) upgradation is getting
capitalized (Refer
below the extract of con call for details).
Consolidated R&D expenses decreased to INR4.9b (6.2% of revenue) in FY20
from INR5.4b (7.0% of revenue). Management has guided a similar range for
FY21 (6-7% of revenue).
Other income rose by 113% to INR1,2b due to foreign exchange gain of INR0.8b
(v/s loss of INR0.01b in FY19).
PAT margin expanded to 12.9% (FY19: 5.7%). In FY19, the company took a hit of
INR3.6b as exceptional items, INR2.2b impairment charge pertaining to Bio
Pharm Inc. and INR1.4b on account of product recall charges. However, adj. PAT
margin expanded to 12.9% from 10.3% in FY19.
Exhibit 1:
Muted operating performance (INR b)
Particulars
Net Revenue (Operations)
Raw Materials Consumed
Gross Margin
Operating and Administ. Expen.
Personnel Cost
EBITDA
Depreciation
EBIT
Financial Charges
EBT
Other Income
PBT (Before Exceptional Items)
Sh. in JV/associate/Except. Items
PBT
Tax
PAT
FY19
76.7
22.2
54.5
20.7
14
19.8
6.2
13.7
5
8.6
0.6
9.2
-3.6
5.6
1.3
4.4
Consolidated
%
FY20
100
79.4
29
21.7
71
57.7
27
21.7
18
14.3
26
21.7
8
6.5
18
15.2
7
4.5
11
10.7
1
1.2
12
11.9
-5
-
7
11.9
2
1.6
6
10.2
%
100
27
73
27
18
27
8
19
6
13
2
15
-
15
2
13
Source: Company Annual Report, MOFSL
4 November 2020
2
 Motilal Oswal Financial Services
ART
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Torrent Pharmaceuticals FY20
Exhibit 2:
4QFY20 Con Call extract highlights employee cost on US manufacturing upgradation being capitalized
Source: Company
Growth driven by significant acquisitions during earlier years
Revenue and EBITDA grew
exponentially in the year after
acquisition, while it remained
muted thereafter.
Over FY15-20, Torrent delivered revenue CAGR of 11.3%. This was primarily on
account of significant acquisitions in the past. Torrent had acquired the
domestic branded formulation business of Elder Pharmaceuticals Limited in
FY15 and branded business of Unichem Laboratories in FY18.
We note that revenue grew exponentially in the year after the acquisitions, after
which, growth was muted.
Further, part of FY16’s growth is also attributable to the launch of a new product
(Aripiprazole) in the US market, which had limited competition initially.
However, the product faced high competition from peers FY17 onwards.
These acquisitions have also led to an increase in India’s contribution to the
company’s total revenue mix (up from 27% in FY16 to 44% in FY20) while
revenue contribution from the US declined from 40% in FY16 to 19% in FY20.
Also, the USFDA’s observations on facilities in FY20 impacted revenue growth
from the US.
Dahej and Indrad facilities received OAI and warning letter, respectively, from
the USFDA in FY20. Further, Levittown facility also received a warning letter for
using bacteria contaminated water system to rinse manufacturing equipment.
The company has stated that the Levittown facility will be ready by 4QFY21.
Due to these observations, only three new approvals were received during FY20
and new product approvals remain on hold from these facilities. Torrent has
filed 12 ANDAs during FY20. They now have a total of 48 ANDAs pending
approval and 6 tentative approvals.
4 November 2020
3
 Motilal Oswal Financial Services
ART
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Torrent Pharmaceuticals FY20
Exhibit 3:
Revenue CAGR stood at 11.3% over FY15-20
Revenue (INR b)
Exhibit 4:
EBITDA CAGR stood at 16.3% over FY15-20
27.3
EBITDA (INR b)
19.8
13.8
10.2
13.5
21.7
76.7
66.9
58.6
46.5
59.5
79.4
FY15
FY16
FY17
FY18
FY19
FY20
FY15
FY16
FY17
FY18
FY19
FY20
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5:
Revenue and EBITDA growth on account of acquisitions
168%
% Revenue Growth
% EBITDA Growth
44%
2%
-12%
-50%
FY16
FY17
FY18
-2%
29%
47%
3%
9%
FY19
FY20
Source: Company Annual Report, MOFSL
Exhibit 6:
Acquisitions led to an increase in India’s revenue mix (INR b)
US’ contribution to revenue
declined to 19% from 21%
in FY19.
India
9%
6%
8%
10%
40%
27%
FY16
USA
9%
8%
12%
14%
23%
34%
FY17
Germany
Brazil
7%
9%
12%
14%
18%
ROW
CRAMs/Others
6%
9%
9%
13%
21%
42%
FY19
6%
10%
9%
12%
19%
44%
FY20
40%
FY18
R&D expenses moderate in FY20
Consolidated Research & Development (R&D) costs reduced by 79bp (as
percentage of sales) in FY20 to INR4.9b from INR5.4b in FY19.
Torrent has cumulatively filed 806 patent applications for New Chemical Entities
in all major markets, of which, 473 patents have been granted so far.
Currently, the company is undergoing the pivotal Phase III clinical trials of its
most advanced discovery research program, i.e. a metabolic modulator NCE for
reduction of cardiovascular risk. Torrent believes that this program would
address the consequences of relative chronic over-nutrition.
The next advanced discovery program is for management of heart failure in
diabetic patients, which has already completed Phase II clinical trials.
4 November 2020
4
 Motilal Oswal Financial Services
ART
|
Torrent Pharmaceuticals FY20
Foam-based topical product for Psoriasis has completed its phase III trial and has
been granted permission for manufacturing and marketing.
Phase I trial has been completed for nasal route delivery of vitamin B12, which
was being explored by management and phase III trial is ongoing. Another
program has completed its phase III clinical trial, which indicates acute pain
management through the nasal route delivery.
On a standalone basis, R&D expenditure capitalized has reduced to 5.8% in FY20
(FY16: 20.2%). Details on capitalization of R&D on consolidated level are not
available.
Exhibit 7:
Consolidated Research & Development expenses reduces (INR b)
Consolidated R&D expenditure
7.4
7.7
% of Revenue (consolidated)
7.0
R&D expenditure reduces
to INR4.9b (FY19: INR5.4b).
6.2
3.7
2.5
FY16
4.3
FY17
4.6
FY18
5.4
FY19
4.9
FY20
Source: Company Annual Report, MOFSL
Exhibit 8:
R&D spends declined at standalone level
Standalone R&D expenditure (INR b)
Exhibit 9:
Decrease in total R&D capital expenditure
% of Revenue expenditure
% Capital expenditure
79.8%
82.8%
88.7%
91.1%
94.2%
20.2%
2.6
FY16
4.3
FY17
3.9
FY18
4.1
FY19
3.9
FY20
FY16
17.2%
11.3%
8.9%
5.8%
FY20
FY17
FY18
FY19
Source: Company, MOFSL
Source: Company, MOFSL
Selling, publicity and
medical literature expenses
increased 9.4% to INR8.1b.
Selling expenses remain elevated
Other expenses increased by 5.2% to INR21.7b in FY20 from INR20.6b in FY19.
Selling, publicity and medical literature expenses form the largest component of
other expenses. It increased by 9.4% to INR8.1b in FY20 from INR7.4b in FY19.
Selling expenses (as % of revenue) of Torrent Pharma has been higher (v/s
peers), mainly due to high proportion of Indian branded generic business, which
demands higher selling costs.
4 November 2020
5
 Motilal Oswal Financial Services
ART
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Torrent Pharmaceuticals FY20
Exhibit 10:
High selling expenses as % of revenue compared to peers
Torrent Pharma
9.7
8.2
6.9
5.2
4.1
FY17
3.1
FY18
2.6
FY19
3.6
FY20
8.7
Sun Pharma
10.8
Aurobindo Pharma
9.6
10.2
6.1
3.0
FY16
6.6
Source: Company Annual Report, MOFSL
Effective tax rates remain low
Effective tax rate decreased to 13.6% in FY20 from 22.5% in FY19. This was on
account of one-time tax benefit of INR0.5b provided through the Coronavirus
Aids, Relief and Economic Security Act (CARES) in the US and certain deductions
of INR1.4b allowed under the Income Tax Act. However, excluding one-time
benefit of CARES, effective tax rate would have been 18.1%.
Cash taxes paid remains significantly higher at INR2.8b v/s tax expense of only
INR1.6b. Cash tax rate stood at 23.9% v/s effective tax rate of 13.9%. This was
mainly due to recognition of deferred tax assets in the balance sheet (FY20:
INR4.3b, FY19: INR3.6b).
Exhibit 11:
Effective tax rates remain low (INR b)
Particulars
FY19
9.35
34.94%
3.27
(0.71)
-
-
0.23
-
-
-
(0.73)
-
(0.22)
-
Standalone
FY20
11.17
34.94%
3.90
(0.72)
(1.38)
-
0.54
-
-
-
-
(0.41)
(0.13)
-
Consolidated
FY19
FY20
6
12
34.94%
34.94%
1.96
4.15
(0.71)
-
0.02
0.24
0.02
0.39
0.01
(0.73)
-
-
-
(0.72)
(1.38)
(0.07)
0.58
(0.09)
0.04
0.14
-
(0.41)
-
(0.53)
ETR declined to 13.6% v/s
22.3% in FY19, due to
certain income tax
deductions and one-time
benefit under CARES.
PBT
Enacted tax rate in India
Expected Income Tax expense
Adjustments:
Weighted deduction allowed in respect of
research and development expenses
Effect of deductions allowed under Income Tax
Recognition of previously unrecognised deferred
tax asset (net)
Effect of expenses not deductible in determining
taxable profit
Foreign exchange difference
Effect of difference between Indian tax rate and
foreign tax rate
Tax adjustments of prior period
MAT Credit entitlement of earlier periods
recognised
Tax impact on future transition to new tax regime
Effect of income taxed at special rates
One time impact on current and deferred tax due
to change in law
Others (net)
Adjusted Income Tax expense
Effective Tax Rate
0.05
(0.02)
0.05
(0.09)
1.90
1.78
1.25
1.62
20.28%
15.96%
22.31%
13.64%
Source: Company Annual Report, MOFSL
4 November 2020
6
 Motilal Oswal Financial Services
ART
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Torrent Pharmaceuticals FY20
Exhibit 12:
Lower effective tax rate…
Effective tax rate
Cash tax rate
50.1%
6.0%
35.3%
26.0%
24.6%
14.2%
FY16
FY17
FY18
FY19
27.2%
22.3%
13.6%
FY20
FY16
FY17
FY18
FY19
FY20
30.5%
23.9%
3.2%
4.8%
Exhibit 13:
…due to recognition of deferred tax assets
DTA as % of NW
7.7%
9.0%
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 14:
Deferred tax on a rise (INR m)
Particulars
Property, plant and equipments
and intangible assets
Amortised cost adjustment on
borrowings
Fair valuation of investment in
mutual fund
Cash flow hedge reserve
Fair valuation of investment in
equity instruments
Provision for employee benefit
expense
Valuation of inventories
Provision for expenses
Provision for chargebacks
Allowance for doubtful trade
receivables
Unrealized foreign exchange loss
Interest accrued but not due
Unabsorbed depreciation /
Tax losses of subsidiaries
Lease obligations
MAT credit entitlement
Unrealised profit in Inventory
Deferred Tax liabilities/(assets)
Opening
FY19
5,977
55
26
76
0
(491)
(385)
(628)
(773)
(307)
44
-
(960)
-
(4,829)
(565)
(2,759)
Additions/
Deletions
1,953
(11)
(23)
145
-
24
(9)
(241)
(283)
241
(44)
(147)
50
-
(2,389)
(132)
(865)
Closing
FY19
7,930
44
4
221
0
(467)
(394)
(868)
(1,056)
(66)
(0)
(147)
(910)
-
(7,218)
(696)
(3,624)
Additions/
Deletions
976
(10)
(4)
(559)
(0)
(10)
(56)
(67)
(115)
32
14
47
805
(122)
(1,788)
147
(709)
Closing
FY20
8,906
33
-
(337)
0
(477)
(450)
(935)
(1,171)
(34)
14
(100)
(105)
(122)
(9,006)
(550)
(4,332)
Source: Company Annual Report, MOFSL
Increase in working capital intensity dents cash flow
Earnings to cash flow conversion declined to 77% in FY20 from 105% in FY19.
This was due to an increase in WC intensity of the business (primarily the
Germany business).
Investment in WC stood at INR3.9b in FY20 (v/s release of INR1b in FY19), led by
higher inventory and trade receivables levels.
CCC increased to 88 days (FY19: 41 days) as inventory days rose to 362 days
(FY19: 318 days) and trade receivables days rose to 76 days (FY19:68 days). This
was partially offset by increase in the payable days to 350 days (FY19: 345 days).
Operating cash flows post interest declined by 30% to INR9.1b in FY20 from
INR12.9b in FY19, led by an increase in WC intensity.
Investment in capex has reduced to INR4b (FY19: INR6.6b). FCF post interest
declined to INR5.0b from INR6.3b in FY19.
7
4 November 2020
 Motilal Oswal Financial Services
ART
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Torrent Pharmaceuticals FY20
Exhibit 15:
Earnings to cash conversion declines (INR b)
Pre Tax CFO
121%
101%
105%
87%
77%
EBITDA
%
Earnings to cash conversion
declined significantly to
77%...
33.2
27.3
13.9
13.8
11.8
13.5
20.8
19.8
16.8
21.7
FY16
FY17
FY18
FY19
FY20
Source: Company, MOFSL
Exhibit 16:
CCC increases to 88 days
…as cash conversion cycle
rose by 47 days.
Particulars
Inventory
Trade Payables
Trade Receivables
Cash conversion cycle (Days) (Closing)
FY16
314
523
79
-130
FY17
318
356
59
21
FY18
FY19
FY20
429
318
362
447
345
350
77
68
76
59
41
88
Source: Company, MOFSL
Exhibit 17:
FCF reduces as investment in WC rises (INRb)
Particulars
PBT
Add/Less: Non-cash adjustments
Add/Less: Non-Operating adjustments
Less: Direct Taxes Paid
Operating Profit Before Working Capital Changes
Inventories
Trade Receivables
Trade Payables
Working capital changes
Cash Generated from Operations
Less: Financial Cost
Cash Flow from Operations post Interest
Less: Capital Expenditure
Less: Acquisitions
Free cash Flow post interest
FY16
23.4
2.3
1.2
(5.8)
23.2
(2.8)
1.2
5.8
4.2
27.4
(2.1)
25.3
(5.9)
(2.3)
17.1
FY17
10.9
3.0
1.3
(3.8)
11.3
(1.9)
4.0
(3.4)
(1.3)
10.1
(1.9)
8.2
(4.9)
(1.3)
2.0
FY18
FY19
FY20
9.3
5.6
11.9
3.6
7.5
4.4
2.5
4.5
4.4
(2.8)
(2.8)
(2.8)
12.5
17.0
17.8
(3.1)
0.3
(2.1)
(3.4)
(0.9)
(1.9)
2.9
1.6
0.2
(3.6)
1.0
(3.9)
8.9
18.0
13.9
(2.8)
(5.0)
(4.9)
6.2
12.9
9.1
(7.9)
(6.6)
(4.0)
(39.6)
-
-
(41.3)
6.3
5.0
Source: Company Annual Report, MOFSL
Provisioning on receivables continue to decline
Despite an increase in FY20 trade receivables, impairment provision as
percentage of gross receivables has continued to decrease from 5% in FY17 to
1% in FY20, indicating an improvement in the quality of receivables.
Exhibit 18:
Impairment provision falls to 1% of gross trade receivables (INR m)
Impairment provision (INR m)
5%
Impairment provisions on
receivables continue to
decline.
3%
2%
269
FY16
469
FY17
387
FY18
2%
281
FY19
1%
195
FY20
% of gross receivables
Source: Company Annual Report, MOFSL
4 November 2020
8
 Motilal Oswal Financial Services
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Torrent Pharmaceuticals FY20
OCF/ borrowings funded significant acquisition and capex plans
Over FY16-20, operating cash flows and borrowings formed primary sources of
funds. These were utilized for making acquisitions (38%), investment in capex
(26%) and for payment of dividends (21%).
Torrent Pharma has made few acquisitions over the past five years. Borrowings
were the main source of funds for these acquisitions.
From FY18, the company has been liquidating most of its investments.
Currently, the company has no investment in mutual funds (FY19: INR3.5b).
Exhibit 20:
Funds were primarily utilized for
acquisitions/capex
FY16-FY20
0%
OCF
Borrowings
15%
Capex
Exhibit 19:
OCF/borrowings are primary sources of funds
FY16-FY20
4%
0%
26%
26%
Acquisitions
Dividends and others
Finance cost
Lease Obligations
Net cash
INR
113.3b
69%
Sale of Investments
Interest Income
21%
INR
113.3b
38%
Source: Company Annual Report, MOFSL
Source: Company Annual Report, MOFSL
Intangibles remain high
Intangibles (including
goodwill) remain significant
at INR45.8b, 95% of
NW/33% of TA.
Intangibles increased significantly from INR18.8b (21% of TA /54% of NW,) in
FY16 to INR45.8b (33% of TA /95% of NW), primarily on account of acquisitions.
Intangibles primarily comprises of:
a) Goodwill on consolidation of INR3.4b (FY19: INR3.4b), and
b) Other intangibles (majorly brands and product licenses) of INR42.4b (FY19:
INR46.1b).
Torrent amortizes intangibles over a definite period and goodwill is tested for
impairment every year.
Over the last five years, Torrent has amortized 8.0% of total intangibles
(including goodwill), which is the highest amongst peers. Hence, we believe that
Torrent’s amortization policy of intangibles is conservative compared to peers.
Exhibit 21:
Torrent’s amortization for intangibles is higher than peers
Amortization as % of intangibles
8%
9%
7%
7%
8%
6%
5%
3%
5%
7%
4%
8%
Torrent
Aurobindo
8%
Sun Pharma
9%
8%
FY16
FY17
FY18
FY19
FY20
Source: Company, MOFSL
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 Motilal Oswal Financial Services
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Torrent Pharmaceuticals FY20
Exhibit 22:
Intangibles remain high (INR b)
Total Intangibles
Goodwill
117.6
4.0
54.3
1.2
17.6
FY16
41.8
% of NW
104.7
3.3
46.1
95.0
3.4
42.4
50.4
1.6
16.6
FY17
FY18
FY19
FY20
Source: Company, MOFSL
Gross borrowings reduced marginally, thereby reducing finance cost
Gross borrowing reduced 3.3% to INR58.4b (FY19: INR60.4b) while borrowing
cost declined 45bp to 7.6% (FY19: 8.0%).
Consequently, finance expenses declined 10.5% to INR4.5b (FY19: INR5.9b).
Exhibit 24:
…leading to reduction in finance cost
Finance cost (INR b)
Cost of borrowing (%)
8.0%
6.8%
7.6%
Exhibit 23:
Gross debt continues to moderate…
Borrowing (INR b)
1.4
Adj. D/E
1.3
1.2
8.2%
7.1%
0.7
0.6
23.5
FY16
25.1
FY17
64.6
FY18
60.4
FY19
58.4
FY20
1.8
FY16
2.1
FY17
3.1
FY18
5.0
FY19
4.5
FY20
Source: Company Annual Report, MOFSL
Source: Company Annual Report, MOFSL
Steady increase in return ratios
RoE increased to 21% from 17% in FY19, mainly due to an increase in adj. net
profit from 10% to 13%.
Exhibit 26:
…leads to increasing return ratios
FY18
11%
0.5
2.7
15%
FY19
10%
0.5
3.0
17%
FY20
13%
0.6
2.9
21%
36%
64%
Adj. ROE*
Adj. ROCE*
Exhibit 25:
Increase in NP margin…
Particulars
Adj. NP Margins
Asset Turns
Financial Leverage
Adj. RoE
FY16
29%
0.8
2.8
64%
FY17
16%
0.6
2.4
24%
Source: Company Annual Report, MOFSL
24%
15%
17%
10%
10%
FY19
17%
21%
13%
FY20
FY16
FY17
FY18
*Adjusted for exceptional items
Source: Company Annual Report, MOFSL
4 November 2020
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 Motilal Oswal Financial Services
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Torrent Pharmaceuticals FY20
NOTES
4 November 2020
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 Motilal Oswal Financial Services
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Torrent Pharmaceuticals FY20
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
> - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In
case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days,the Research Analyst shall within following 30 days take appropriate measures to make the recommendation
consistent with the investment rating legend.
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Disclosure of Interest Statement
Analyst ownership of the stock
Torrent Pharmaceuticals
No
A graph of daily closing prices of securities is available at
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Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its
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Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance
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* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.
4 November 2020
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