Torrent Pharma: Buy Signal Issued! Rs 4200 Target & Strategic JB Chemicals Deal Unveiled!

Prabhudas Lilladher has released a research report on Torrent Pharmaceuticals, maintaining an 'Accumulate' rating for the stock with a revised price target of Rs 4,200 per share. The report indicates that Torrent Pharmaceuticals' EBITDA for the second quarter of FY26 was in line with analyst estimates. The company reported substantial sales from its highly profitable branded formulation business, amounting to Rs 90 billion, spread across India, Brazil, and other international markets.

A key highlight of the report is the acquisition of JB Chemicals & Pharma. This strategic move is expected to elevate Torrent Pharmaceuticals to become the fifth-largest player in the Indian pharmaceutical market. The acquisition will fortify its presence in high-margin chronic therapies and open avenues into new therapeutic areas. Furthermore, it brings aboard JB Chemicals & Pharma's Contract Development and Manufacturing Organization (CDMO) business, offering diversification and future growth opportunities.

The deal is viewed as financially attractive and strategically sound, promising long-term earnings growth for Torrent Pharmaceuticals. The combined entity is currently trading at a valuation of 23.5x and 20x Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) for FY27E and FY28E, respectively.

Impact This news is likely to have a positive impact on investor sentiment towards Torrent Pharmaceuticals, potentially driving its stock price higher towards the revised target. The successful integration of JB Chemicals & Pharma and the realization of synergies will be crucial for achieving these growth expectations. The rating of 7/10 for market impact.

Difficult Terms Explained: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance. BGx (Branded Generics): Refers to branded versions of generic drugs, which are typically more profitable than unbranded generics. CDMO (Contract Development and Manufacturing Organization): A company that provides drug development and manufacturing services to other pharmaceutical companies on a contract basis. EV/EBITDA: Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a valuation multiple used to assess a company's total value relative to its operating earnings. Synergies: The benefits gained from the combined operations of two companies that are greater than the sum of their individual parts.