Torrent Pharmaceuticals Analysis

dividend

Pros

• Dividends per share have increased over the past 10 years.
• Dividends paid are well covered by earnings (3.6x coverage).
• Dividends after 3 years are expected to be well covered by earnings (3x coverage).

Cons

• Dividends per share have been volatile in the past 10 years (annual drop of over 20%).
• Torrent Pharmaceuticals's pays a lower dividend yield than the bottom 25% of dividend payers in India (0.76%).
• Torrent Pharmaceuticals's dividend is below the markets top 25% of dividend payers in India (3.08%).

future

Pros

• Cash flow for Torrent Pharmaceuticals is expected to increase by more than 50% in 2 years time.
• Torrent Pharmaceuticals's earnings growth is expected to exceed the low risk savings rate of 7.2%.
• Torrent Pharmaceuticals's earnings are expected to increase by more than the low risk growth rate in 3 years time.
• Torrent Pharmaceuticals is expected to efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).
• Performance (ROE) is expected to be above the current IN Pharmaceuticals industry average.
• An improvement in Torrent Pharmaceuticals's performance (ROE) is expected over the next 3 years.
• Torrent Pharmaceuticals's revenue growth is expected to exceed the India market average.

Cons

• Torrent Pharmaceuticals's earnings are expected to grow by 16.6% yearly, however this is not considered high growth (20% yearly).
• Torrent Pharmaceuticals's earnings growth is positive but not above the India market average.
• Torrent Pharmaceuticals's earnings are expected to increase but not above the low risk growth rate next year.
• Torrent Pharmaceuticals's net income is expected to increase but not above the 50% threshold in 2 years time.
• Torrent Pharmaceuticals's revenue is expected to increase but not above the 50% threshold in 2 years time.
• Torrent Pharmaceuticals's revenue is expected to grow by 9.1% yearly, however this is not considered high growth (20% yearly).

health

Pros

• Torrent Pharmaceuticals is profitable, therefore cash runway is not a concern.
• Torrent Pharmaceuticals is profitable, therefore cash runway is not a concern.
• Debt is well covered by operating cash flow (22.6%, greater than 20% of total debt).
• Torrent Pharmaceuticals's cash and other short term assets cover its long term commitments.
• Interest payments on debt are well covered by earnings (EBIT is 3.4x coverage).

Cons

• Torrent Pharmaceuticals's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
• Debt is not covered by short term assets, assets are 0.8x debt.
• The level of debt compared to net worth has increased over the past 5 years (110.5% vs 127.5% today).
• Torrent Pharmaceuticals's level of debt (127.5%) compared to net worth is high (greater than 40%).
• High level of physical assets or inventory.

management

Pros

• The tenure for the Torrent Pharmaceuticals board of directors is about average.
• Samir's compensation has been consistent with company performance over the past year, both up more than 20%.

Cons

• Samir's remuneration is higher than average for companies of similar size in India.

misc

Pros

Cons

• Torrent Pharmaceuticals has significant price volatility in the past 3 months.

past

Pros

• Torrent Pharmaceuticals's 1-year earnings growth exceeds its 5-year average (134.6% vs -16.6%)
• Torrent Pharmaceuticals used its assets more efficiently than the IN Pharmaceuticals industry average last year based on Return on Assets.
• Torrent Pharmaceuticals has improved its use of capital last year versus 3 years ago (Return on Capital Employed).
• Torrent Pharmaceuticals's earnings growth has exceeded the IN Pharmaceuticals industry average in the past year (134.6% vs 22.7%).

Cons

• Torrent Pharmaceuticals's year on year earnings growth rate was negative over the past 5 years, however the most recent earnings are above average.
• Whilst Torrent Pharmaceuticals has efficiently used shareholders’ funds last year (Return on Equity greater than 20%), this is metric is skewed due to its high level of debt.

value

Pros

• TORNTPHARM outperformed the Pharmaceuticals industry which returned 26.7% over the past year.
• TORNTPHARM outperformed the Market in India which returned -14.5% over the past year.

Cons

• Torrent Pharmaceuticals's share price is above the future cash flow value, it's not available at a moderate discount (< 20%).
• Torrent Pharmaceuticals's share price is above the future cash flow value, it's not available at a substantial discount (< 40%).
• Torrent Pharmaceuticals is overvalued based on assets compared to the IN Pharmaceuticals industry average.
• Torrent Pharmaceuticals is poor value based on expected growth next year.
• Torrent Pharmaceuticals is overvalued based on earnings compared to the IN Pharmaceuticals industry average.
• Torrent Pharmaceuticals is overvalued based on earnings compared to the India market.
• NSEI:TORNTPHARM is up 1.5% underperforming the Pharmaceuticals industry which returned 6.8% over the past month.
• NSEI:TORNTPHARM is up 1.5% underperforming the market in India which returned 8% over the past month.