Torrent Pharma delivered a textbook quarter — revenues up 18 per cent year-on-year to Rs 33 billion, profits climbing 26 per cent to Rs 6.4 billion, and EBITDA margins nudging up 40 basis points to 32.9 per cent. In the ordinary course of business, that would have been the headline. But this is no ordinary quarter.
In the same breath, Torrent completed the acquisition of a controlling 48.8 per cent stake in JB Chemicals and Pharmaceuticals — a deal that reshapes the company’s competitive footprint and adds a new layer of complexity to an already rich valuation.
The stock currently trades at about 51.2 times FY26 estimated earnings.
India: The Engine
The domestic business remains the beating heart of the Torrent story. India revenues grew 14 per cent year-on-year to approximately Rs 18 billion, comfortably ahead of the broader Indian pharmaceutical market.
“India performance was led by 5.5 per cent YoY volume growth versus IPM growth of 1.2 per cent, while price growth stood at 5.8 per cent, broadly in line with the market. New products contributed 2.7 per cent to growth, reflecting balanced volume, price, and portfolio-led growth,” notes JM Financial.
That balance — volume, price, and new launches all contributing simultaneously — is exactly what a chronic-therapy franchise at this stage of maturity should look like.
Curatio, the dermatology acquisition absorbed in FY21, added further fuel, growing 27 per cent year-on-year on higher over-the-counter spending and demand generation. Nirmal Bang notes the company “remains on track to close the year with approximately 7,000 plus medical representatives”
Brazil Leads, US Recovers, Germany Stumbles
Internationally, it was a quarter of contrasts. Brazil was the standout, rising 27 per cent year-on-year to Rs 3.7 billion. The pricing tailwind from Brazil’s inflation cycle is moderating, but the launch pipeline is stepping in. JM Financial notes management is “targeting 10 to 15 per cent growth against an expected market growth of 6 to 7 per cent” — a sign of a business that has built sustainable depth rather than riding a single driver.
The US grew 19 per cent year-on-year to Rs 3.2 billion, supported by new launches achieving target market shares. JM Financial frames the longer ambition: “The business remains relatively small and is largely launch-dependent at this stage. Over time, the company is targeting annual revenues of over USD 200 million as the portfolio and launch cadence scale up.” That gap between where Torrent is and where it wants to be in the US is both the risk and the opportunity in equal measure.
Germany was the weak link, growing 8 per cent in reported terms but declining in constant currency due to supply disruption at a third-party manufacturer. JM Financial is candid that “the supplier is facing regulatory issues with no clear resolution timeline” and that alternate supplier onboarding “is expected to take 3 to 4 quarters.” A contained problem, but one that will drag on well into FY27.
The JB Pharma Card
Nirmal Bang calls the acquisition “a key strategic milestone,” with JB Pharma set to be consolidated from Q4FY26. The synergy opportunity is substantial — JM Financial estimates “total cost synergy potential of Rs 4 to 4.5 billion, to be realised over 2 to 3 years, with about 20 per cent in the first year and 80 per cent in the second. Synergies are purely cost-based, with the initial focus on stabilising the topline, particularly in cardiac and gastro segments.” Crucially, the zero-margin trade generics format at JB Pharma is not intended to be continued long term.
The integration caveat is real, however. JM Financial acknowledges Q4 “may see some business softness due to the transition,” with normalisation expected only from Q1FY27.
Semaglutide, and Margins
Beyond the merger, Torrent’s planned semaglutide launch in India — the active ingredient in Ozempic and Wegovy — adds a medium-term kicker that current estimates do not fully capture. Nirmal Bang has “increased estimates factoring in the planned launch of semaglutide in India along with new product launches in Brazil and the US, which is expected to support medium-term growth.” India’s diabetic population is vast and under-treated. A credible generic GLP-1 entry would put Torrent at the front of what could become one of the most significant pharmaceutical categories of the decade domestically.
Over FY25 to FY28, the consensus projects revenue and EBITDA CAGRs of approximately 14 to 16 per cent, with PAT growing at 23 to 26 per cent depending on how much JB Pharma consolidation credit you extend. Margins are expected to hold at approximately 33 per cent, with JM Financial projecting 110 basis points of expansion on the combined entity. Return on equity is projected to reach 30.7 per cent by FY27.
Nirmal Bang has a target price of Rs 4,180 on the stock — roughly flat from current levels, implying a return of less than 1 per cent. JM Financial, factoring in the combined entity with JB Pharma, arrives at Rs 4,743 — about 13 per cent upside from here.
