Torrent Pharma share price: Share price of Torrent Pharmaceuticals fell 5.5 percent to Rs 1,449.25 and Rs 1,448.8 per share on BSE and NSE, respectively, during the intraday session of Wednesday’s negotiation. The drop in the mid-cap pharmaceutical company’s stock was mainly attributed to the costly deal with Curatio Healthcare.
Torrent Pharma said in a regulatory filing on Tuesday that it will acquire Curatio Healthcare for Rs 2,000 crore to strengthen its presence in the dermatology segment. The company, in this regard, has signed definitive agreements to acquire 100 percent of Curatio, according to the document.
Chennai-based Curatio has a portfolio of over 50 brands, including Tedibar, Atogla, Spoo, B4 Nappi and Permite, in the cosmetic dermatology segment in India. Its top ten brands account for about 75 percent of total revenue.
Despite Curatio’s strong growth prospects, improved margin profile and Torrent Pharma’s solid track record of cumulative synergies, the deal is expensive and dilutive by 5-9% to FY23 EPS -25E, national brokerage firm Kotak Institutional Equities said in its report on the pharmaceutical company.
Torrent Pharma trades at a lofty valuation of ~30X FY2024E EPS, and the brokerage expects a better entry point, downgrading the stock to REDUCE from ADD.
While Curatio’s FY22 EBITDA margin stood at 26.8%, Torrent Pharma forecasts ~29% EBITDA margin for Curatio in FY23 with a new medium-term increase, it said, and increases sales CAGR of 20% over FY2023-25E for Curatio. , with EBITDA margins of 31 and 33% in years 24 and 25, respectively.
Similarly, Credit Suisse noted that the cost of the Curatio acquisition is high at 23x FY23 EV/EBITDA and further said that the Curatio acquisition provides scale in the fast-growing dermatology segment. The global brokerage offers an outperform rating with a price target of Rs 1,750 per share.
The stock around 9:50 am was trading 3.5 percent lower at Rs 1,480 per share on the BSE against a 0.5 percent fall in the S&P BSE Sensex. Torrent Pharma is an Indian multinational pharmaceutical company, owned by Torrent Group and headquartered in Ahmedabad.