Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Torrent Pharmaceuticals / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/torrent-pharmaceuticals-ltd" target="_blank" data-smartkarma-citation="entities:15762:1" rel="noopener">Torrent Pharmaceuticals (TRP IN)</a> reported 16% YoY revenue growth to INR26.6B in Q2FY24. Strong performance in India, Brazil, and Germany is partially offset by the revenue decline in the U.S.</li>
<li>EBITDA increased 22% YoY to INR8.3, leading to 138bps YoY expansion in margin to 31%, due to cost optimization and discontinuation of the low margin business in the U.S.</li>
<li>Initial bull thesis on the company regarding its domestic market strength is still intact. Further upside will be driven by superior performance in India and Brazil businesses and margin improvements.</li>
</ul>



Torrent Pharmaceuticals (TRP IN) reported 16% YoY revenue growth to INR26.6B in Q2FY24. Strong performance in India, Brazil, and Germany is partially offset by the revenue decline in the U.S.
EBITDA increased 22% YoY to INR8.3, leading to 138bps YoY expansion in margin to 31%, due to cost optimization and discontinuation of the low margin business in the U.S.
Initial bull thesis on the company regarding its domestic market strength is still intact. Further upside will be driven by superior performance in India and Brazil businesses and margin improvements.


Torrent Pharmaceuticals (TRP IN): Q2FY24 Result- Domestic Business Continued Solid Growth Path

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>There could be 18 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 28 December.</li>
<li>If all changes are on expected lines, one-way turnover is estimated at 58.2% and that will result in a one-way trade of INR 20bn (US$240m).</li>
<li>Since July, the potential adds to the index have outperformed the index and the potential deletes by a big margin. Momentum could keep the outperformance going till implementation date.</li>
</ul>


There could be 18 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 28 December.
If all changes are on expected lines, one-way turnover is estimated at 58.2% and that will result in a one-way trade of INR 20bn (US$240m).
Since July, the potential adds to the index have outperformed the index and the potential deletes by a big margin. Momentum could keep the outperformance going till implementation date.


NIFTY200 Momentum30 Index Rebalance Preview: 58% Turnover & Strong Momentum

<ul>
<li>In Q2FY24, <a href="https://www.smartkarma.com/entities/cipla-ltd" target="_blank" data-smartkarma-citation="entities:3918:1" rel="noopener">Cipla Ltd (CIPLA IN)</a> clocked record-high quarterly revenue at INR66.8B (+15% YoY), and EBITDA margin of 26%, driven by double-digit growth across India, North America, and South Africa.</li>
<li>U.S. business reported highest ever revenue of $229M. India revenue is up 10% YoY, driven by continued market beating performance in branded prescription and trade generics businesses.</li>
<li>Cipla raised FY24 EBITDA margin guidance from 23% to 23% to 24% with bias towards the higher end. The company started FY24 with an EBITDA margin guidance of 21–22%.</li>
</ul>


In Q2FY24, Cipla Ltd (CIPLA IN) clocked record-high quarterly revenue at INR66.8B (+15% YoY), and EBITDA margin of 26%, driven by double-digit growth across India, North America, and South Africa.
U.S. business reported highest ever revenue of $229M. India revenue is up 10% YoY, driven by continued market beating performance in branded prescription and trade generics businesses.
Cipla raised FY24 EBITDA margin guidance from 23% to 23% to 24% with bias towards the higher end. The company started FY24 with an EBITDA margin guidance of 21–22%.


2023 High Conviction Update: Cipla (CIPLA IN)- Q2 Result Beats Estimates; Margin Guidance Raised

Dr. Reddy's Laboratories / Equity Bottom-Up

<ul>
<li>Global generics revenue increased 9% YoY to INR61 billion, mainly driven by double-digit growth in North America and Europe generic businesses, partly offset by muted growth in domestic market.</li>
<li>Revenue from North America generics increased 13% y/y to INR31.7 billion, driven by growing momentum in core portfolio, Mayne integration, and favorable Fx. Pricing environment remains stable.</li>
<li>Despite increase in SG&amp;A and R&amp;D expenses, EBITDA grew 13% YoY to INR 21.8 billion. Net profit increased 33% YoY to INR14.8 billion. Both EBITDA and net profit topped estimates.</li>
</ul>


Global generics revenue increased 9% YoY to INR61 billion, mainly driven by double-digit growth in North America and Europe generic businesses, partly offset by muted growth in domestic market.
Revenue from North America generics increased 13% y/y to INR31.7 billion, driven by growing momentum in core portfolio, Mayne integration, and favorable Fx. Pricing environment remains stable.
Despite increase in SG&amp;A and R&amp;D expenses, EBITDA grew 13% YoY to INR 21.8 billion. Net profit increased 33% YoY to INR14.8 billion. Both EBITDA and net profit topped estimates.


Dr. Reddy's Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ajanta-pharma-ltd" target="_blank" data-smartkarma-citation="entities:10053:1" rel="noopener">Ajanta Pharma (AJP IN)</a> reported better-than-expected profitability in Q1FY24, due to softening of raw material prices and normalization of freight rates. EBITDA margin expanded 300bps YoY to 26%.</li>
<li>Revenue increased 7% YoY to INR10B, driven by superior execution in branded generics business and lesser price erosion in the U.S. 73% of the total sales came from branded generic.</li>
<li>Management maintained mid-teen revenue growth and EBITDA margin guidance of ~25% for FY24. Ajanta Pharma has a positive business outlook due to growing branded generic business and niche U.S. launches.</li>
</ul>



Ajanta Pharma (AJP IN) reported better-than-expected profitability in Q1FY24, due to softening of raw material prices and normalization of freight rates. EBITDA margin expanded 300bps YoY to 26%.
Revenue increased 7% YoY to INR10B, driven by superior execution in branded generics business and lesser price erosion in the U.S. 73% of the total sales came from branded generic.
Management maintained mid-teen revenue growth and EBITDA margin guidance of ~25% for FY24. Ajanta Pharma has a positive business outlook due to growing branded generic business and niche U.S. launches.


Ajanta Pharma (AJP IN): Starts FY24 With Healthy Branded Generics Growth and Improving Margins

India

Torrent Pharmaceuticals Ltd. manufactures bulk drugs and pharmaceutical formulations. The Company's formulations include cardio-vascular, psychotropic and anti-biotic drugs while its bulk drugs include atenolol, ciprofloxacin and norfloxacin. Torrent Pharmaceuticals has wholly owned subsidiaries in several regulated and less regulated international markets.

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Torrent Pharmaceuticals (TRP IN)