Torrent Pharma rallies 4% as USFDA issues EIR for Gujarat facility

Shares of Torrent Pharmaceuticals hit a new high of Rs 3,574 on the BSE on Friday, as they rallied 4 per cent in the intraday trade, after the US drug regulator issued an Establishment Inspection Report (EIR) for its manufacturing facility at Indrad, Gujarat.

The US Food and Drug Administration (USFDA) had conducted a Pre-Approval Inspection (PAI) and a GMP inspection at the company's manufacturing facility situated in Indrad, Gujarat, from June 3 to June, 12, 2024. At the end of the inspection, the Company was issued a Form 483 with 5 (five) observations.

In its exchange filing, Torrent Pharma said that the USFDA issued its Establishment Inspection Report (EIR) with Voluntary Action Indicated (VAI) classification for the said manufacturing facility and the inspection has now been successfully closed by the USFDA.

VAI means objectionable conditions or practices were found, but the agency is not prepared to take or recommend any administrative or regulatory action.

Meanwhile, in the past one year, Torrent Pharma has outperformed the market by zooming 94 per cent as compared to 27 per cent rise in the BSE Sensex.

Torrent Pharma is the fifth largest (sixth in FY23) player in the Indian pharmaceutical market (IPM), with a strong presence in chronic and sub-chronic therapies that drove around 75 per cent of its FY24 revenues. It is among the top five players in key therapeutic areas of cardiovascular (CVS), central nervous system (CNS), vitamins, minerals and nutrients (VMN), and gastrointestinal (GI).

In Brazil, Torrent Pharma has witnessed a continued double-digit growth in its business over the last few years.

In past one week, the stock gained 7 per cent after rating agency ICRA reaffirmed the long-term credit rating of the banking facilities and non-convertible debentures of the company at 'ICRA AA+/Stable'. ICRA also reaffirmed its rating on the commercial paper programme at 'ICRA A1+'.

"The ratings reaffirmation for Torrent Pharmaceuticals factors in its strong  financial profile, characterised by healthy profitability indicators, robust credit metrics and strong liquidity, which are expected to be sustained over the near to medium term," the rating agency said.

Healthy operating profitability, led by profitable domestic business and select international businesses, along with operating leverage and cost control could further boost profitability.

"Torrent Pharma's profitability continues to improve on the back of increasing operating leverage, higher contribution from branded generics markets and successful implementation of cost efficiency measures. The company's margins are likely to be sustained, supported by its growing branded generics business," ICRA said in its rating rationale.

Analysts at Centrum Broking, meanwhile, said they remain positive on Torrent Pharma on the back of  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, growth in Brazil/Germany segment, and US ramping-up meaningfully over the next 2-3 years. However, the brokerage firm sees majority of the positives being already factored in the current price. The stock is currently trading above brokerage firm’s target price of Rs 3,350 per share.