Torrent Pharma is eyeing inorganic opportunities to accelerate growth, says chairman Samir Mehta. The company has been a star performer in 2014 crossing market capitalisation of Rs 18,000 crore from Rs 8000 crore in the year.
Torrent was the most promising company of the year at CNBC-TV18's The India Business Leader Awards.
Speaking to CNBC-TV18, Mehta says integration with Elder Pharma has worked out well and will become cash-accretive by next year. The company acquired Elder Pharma's branded formulation business which helped in pushing growth.
However, the US growth of Torrent is likely to be subdued in 2015. The company will look at growing scale in the US market, adds Mehta.
Below is verbatim transcript of the interview:
Q: Is there any impact of the currency depreciation in Brazil? How can that impact Torrent Pharmaceuticals' performance?
A: Not really. At the end because of the strengthening of dollar vis-à-vis rupee, overall impact of real depreciation on the company is not significant at all.
Q: What would be the impact for Venezuela?
A: We do not have much business in Venezuela, so that hardly matters to us.
Q: How is Elder Pharma integration panning out and what is the combined growth expected from the portfolios?
A: Elder integration has worked out quite well. It has been about six months since we acquired. The Elder portfolio was de-growing heavily over the last few years. Over these two quarters we have come back to a position of growth in the second quarter and we hope to continue to build on this.
Q: When is the integration expected to become cash or earning per share (EPS) accretive?
A: It should be cash accretive next year and EPS accretive the following year.
Q: Branded growth has been very robust in the previous quarters. What can we expect in terms of run rate in the coming quarters for the branded India growth?
A: We have been doing better than the industry average and we hope to continue to do that over the next several years.
Q: Is the company eyeing any more inorganic opportunities to fuel further growth?
A: Yes, it is an important way through which growth would be achieved over the next five years. At this moment Elder integration is something that we are occupied with but once we have completed that task on hand, we would look at more opportunities.
Q: Where you see more opportunities - domestic or international and if you could also mention the ticket size of possible acquisitions?
A: It is hard to say what would be the size at this point in time but India is certainly a growth market and we need to continue to build our business here. US is another important market where we been relatively late entrant and we need to grow the size there.
Q: Last year you benefited quite a bit from Cymbalta generic. What is the plan in terms of scaling up for this year?
A: Cymbalta was an exceptional opportunity. It is unlikely that such opportunities will keep repeating but we do have interesting mix of Para IV in our portfolio and we hope that some of them would fructify over the next couple of years.
Q: How will be the US business growth in 2015?
A: Since it's been on a large base of Cymbalta which was a one-off effect, over the 12 months we would see subdued growth but once that base effect is corrected, should come back to high growth base again.
Torrent Pharma stock price
On January 12, 2015, at 12:30 hrs Torrent Pharmaceuticals was quoting at Rs 1183.30, up Rs 1.20, or 0.10 percent. The 52-week high of the share was Rs 1220.00 and the 52-week low was Rs 464.10.
The company's trailing 12-month (TTM) EPS was at Rs 46.27 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 25.57. The latest book value of the company is Rs 135.31 per share. At current value, the price-to-book value of the company is 8.75.
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