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Torrent Pharmaceuticals

The International markets are doing well. Revenue from international markets growing strongly on the back of strong performance in Brazil, Europe (excluding German) and Russian operations. Brazilian operations to continue strong sales growth led by new product launches. Mexico likely to start contributing from Q1FY10.
Manufacturing of products constituting a significant part of Heumann (Germany) sales have been successfully transferred to India and is expected to reap benefits of lower costs from Q3FY09. Heumann reached at break-even during Q2FY09.

Revenue and earning estimates: Expect 15.1% and 25.3% revenue and earning CAGR over FY08-10E. Expect EPS of Rs.22.2 for FY09E and Rs.25 for FY10E. At the current market price of Rs.122, the stock is trading at 5.5x FY09 and 4.9x FY10 earning estimates. Accumulate with target price Rs.222. At target price, the stock will be valued at 10x FY09E and 8.9 FY10E price-to-earning multiple and 2.8x FY09E EV/EBIDTA multiple.