Looking for growth stocks? Pay attention to Torrent Pharmaceuticals
30-05-2016 • About Torrent Pharmaceuticals (
$TORNTPHARM) • By InTwits
Torrent Pharmaceuticals is a growth stock in Pharmaceuticals industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Torrent Pharmaceuticals showed growth in the last financial year. Torrent Pharmaceuticals's revenue surged on 42.4% in FY2016. In addition to revenue Torrent Pharmaceuticals also keeps delivering EBITDA growth. It was 167% in FY2016
If we look for the longer period Torrent Pharmaceuticals showed fast revenue growth of 28.8% from FY2013 to FY2016 annually. EBITDA surged on 57.4% from FY2013 to FY2016 annually.
Torrent Pharmaceuticals ($TORNTPHARM) financials for the last 5 years
| mln. INR | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 25,944 | 30,535 | 40,363 | 45,853 | 65,290 |
|---|
| Revenue growth, % | | 17.7% | 32.2% | 13.6% | 42.4% |
|---|
| SG&A, % | | | | 11.6% | 8.38% |
|---|
| EBITDA | 5,232 | 6,972 | 9,553 | 10,202 | 27,204 |
|---|
| EBITDA growth, % | | 33.3% | 37.0% | 6.8% | 166.7% |
|---|
| EBITDA margin, % | 20.2% | 22.8% | 23.7% | 22.2% | 41.7% |
|---|
| Net Income | 2,840 | 4,328 | 6,639 | 7,509 | 17,224 |
|---|
| Net Income margin, % | 10.9% | 14.2% | 16.4% | 16.4% | 26.4% |
|---|
| |
| CAPEX | 1,703 | 2,929 | 4,001 | 2,426 | 6,040 |
|---|
| CAPEX/Revenue, % | 6.56% | 9.59% | 9.91% | 5.29% | 9.25% |
|---|
| Debt | 5,903 | 7,177 | 11,359 | 27,519 | 23,828 |
|---|
| Cash | 1,906 | 6,270 | 7,694 | 5,656 | 6,449 |
|---|
| Net Debt/EBITDA | 0.8x | 0.1x | 0.4x | 2.1x | 0.6x |
|---|
| |
| ROIC, % | 26.4% | 30.5% | 33.2% | 19.7% | 44.2% |
|---|
| ROE, % | 25.6% | 33.1% | 39.9% | 34.2% | 58.6% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. The company showed fast EBITDA margin growth of 19.5 pp from 22.2% to 41.7% in FY2016. In the last 3 years Torrent Pharmaceuticals's EBITDA margin surged on 18.9 pp from 22.8% in FY2013 to 41.7% in FY2016.
We call Torrent Pharmaceuticals an attractive growth stock as together with the growth it delivers high ROIC at 44.2%. Three years ago it was considerably lower at 30.5%. For the last three years the average ROIC was 32.3%.
The company showed fast Net Income margin growth of 10 pp from 16.4% to 26.4% in FY2016. If we look for the longer period Net Income margin surged on 12.2 pp from 14.2% in FY2013 to 26.4% in FY2016.
Torrent Pharmaceuticals operates at ROE of 58.6%. For the last three years the average ROE was 44.2%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.Torrent Pharmaceuticals's CAPEX/Revenue was 9.25% in FY2016. CAPEX/Revenue decreased slightly on 0.340 pp from 9.59% in FY2013 to 9.25% in FY2016. It's average CAPEX/Revenue for the last three years was 8.15%.
Leverage (Debt)
The company has low debt level at 0.6x Net Debt/EBITDA - at the same time with high growth. In the last 3 years leverage surged on 0.51x from 0.13x in FY2013 to 0.64x in FY2016.
Peers in Pharmaceuticals
Below you can find Torrent Pharmaceuticals benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Mangalam Drugs & Organics ($MANGALAM) | | -18.2% | -2.1% | 79.8% | 33.7% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 39.9% | 40.4% | 42.4% | 70.2% | |
| Lyka Labs ($LYKALABS) | 41.9% | -25.7% | -22.6% | 68.7% | |
| Marksans Pharma ($MARKSANS) | 16.7% | 23.3% | 43.3% | 26.8% | |
| Torrent Cables ($TORRCABS) | 27.5% | 17.4% | -42.9% | 26.5% | |
| |
|---|
| Median (41 companies) | 19.8% | 14.7% | 12.6% | 8.6% | 12.8% |
|---|
| Torrent Pharmaceuticals ($TORNTPHARM) | | 17.7% | 32.2% | 13.6% | 42.4% |
Top companies by Gross margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | | 52.1% | 57.4% | 57.6% | 59.6% |
| Omega Laboratories ($OMEGALAB) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 46.9% | 26.1% | 28.7% | 28.8% | 29.8% |
|---|
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 37.2% | 38.2% | 40.2% | 37.4% | |
| Hester Biosciences ($HESTERBIO) | | | | 32.9% | |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 40.8% | 44.3% | 44.9% | 29.2% | |
| Natco Pharma ($NATCOPHARM) | 21.5% | 23.2% | 24.9% | 26.2% | |
| Dr.Reddy'S Laboratories ($DRREDDY) | 25.8% | 22.9% | 25.1% | 23.2% | 25.8% |
| |
|---|
| Median (53 companies) | 12.7% | 12.8% | 14.3% | 12.0% | 18.0% |
|---|
| Torrent Pharmaceuticals ($TORNTPHARM) | 20.2% | 22.8% | 23.7% | 22.2% | 41.7% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Claris Lifesciences ($CLARIS) | 58.1% | 42.9% | | 103.1% | 15.8% |
| Wintac ($WINTAC) | | | | 22.8% | |
| Hester Biosciences ($HESTERBIO) | | | | 21.5% | |
| Ipca Laboratories ($IPCALAB) | 11.2% | 8.3% | 11.6% | 17.8% | |
| Natco Pharma ($NATCOPHARM) | 24.4% | 16.3% | 14.4% | 14.1% | |
| |
|---|
| Median (31 companies) | 8.2% | 7.5% | 5.7% | 6.2% | 9.5% |
|---|
| Torrent Pharmaceuticals ($TORNTPHARM) | 6.6% | 9.6% | 9.9% | 5.3% | 9.3% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Marksans Pharma ($MARKSANS) | -142.4% | 34.9% | 33.8% | 41.2% | |
| Alembic Pharmaceuticals ($APLLTD) | 27.5% | 29.1% | 41.5% | 35.7% | 62.1% |
| Jenburkt Pharmaceuticals ($JENBURPH) | 34.1% | 29.0% | 32.4% | 35.3% | |
| Abbott India ($ABBOTINDIA) | 29.6% | 26.9% | 30.5% | 34.2% | |
| Divi'S Laboratories ($DIVISLAB) | 30.6% | 30.4% | 32.3% | 30.5% | |
| |
|---|
| Median (63 companies) | 13.7% | 13.2% | 14.4% | 13.0% | 14.5% |
|---|
| Torrent Pharmaceuticals ($TORNTPHARM) | 26.4% | 30.5% | 33.2% | 19.7% | 44.2% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 3.5x | 3.5x | 6.4x | |
| Shasun Pharmaceuticals ($SHASUNPHAR) | 2.8x | 4.5x | 6.0x | 6.2x | |
| Claris Lifesciences ($CLARIS) | 1.9x | 1.1x | 1.8x | 3.2x | 2.9x |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.6x | 2.6x | 2.3x | 2.9x | 2.1x |
| Neuland Laboratories ($NEULANDLAB) | 4.2x | 3.5x | 2.6x | 2.6x | 2.0x |
| |
|---|
| Median (48 companies) | 1.6x | 1.4x | 0.4x | 0.0x | 0.9x |
|---|
| Torrent Pharmaceuticals ($TORNTPHARM) | 0.8x | 0.1x | 0.4x | 2.1x | 0.6x |
