Torrent Pharmaceuticals Q1 FY27 earnings call

Torrent Pharmaceuticals reported robust financial performance for Q1 FY27, with consolidated revenues reaching INR4,921 crores, marking a substantial 55% year-on-year increase. Operating EBITDA also saw significant growth, rising 61% to INR1,664 crores, resulting in an operating EBITDA margin of 33.8%. The company's net debt to EBITDA ratio stood at 2.07x, reflecting a manageable leverage position for the combined entity.

The merger of JB with Torrent Pharma was officially completed on July 8, 2026, with the appointed date of January 21, 2026. Integration activities have been initiated, which management anticipates might cause a minor and transient^📎 impact on revenues in some territories over the next 2-3 quarters. Despite this, the underlying JB business reported revenues of INR1,201 crores, growing 10% year-on-year, and achieved an operating EBITDA margin of 35.3%, driven largely by accelerated cost synergy realization.

Torrent's base India business demonstrated strong growth, with revenues increasing by 19% for the quarter, outperforming the IPM growth of 12%. This performance was attributed to an overall increase in IPM growth, successful new product launches, and volume growth acceleration from field force expansion. The Curatio business, in particular, grew 34% in Q1, supported by OTC ad spends and further field-force expansion. The combined entity now ranks first in the cardiac market, which is a key growth segment.

Internationally, Brazil revenues grew 27% in constant currency, with the generics division contributing 22% of sales, and is expected to return to mid-teens growth. The US business grew 36%, benefiting from new launches and certain one-time^📎 opportunities. Conversely, Germany revenues declined 9% in constant currency, primarily due to supply disruptions from a third-party supplier and lower tender off-take, posing an ongoing challenge.

The semaglutide franchise in India achieved a 36% market share for both oral and injectable products in Q1. However, the injectable product faced a temporary setback^📎 due to a supply-related issue with its manufacturing partner, leading to a loss of sales in July and most of August. An alternate supply source has been secured, with all Semalix SKUs expected back by the end of August. Management noted that the overall semaglutide market has shown signs of plateauing after its initial rapid ramp-up.

Cost synergy realization from the JB merger is tracking ahead of plan, with the full-year target expected to be significantly higher than the initial INR90 crores. The margin improvement in the JB business is largely attributed to these synergies. For the base business, management expects at least a 0.5% annual improvement in EBITDA margin. The combined field-force strength was 9,400 at the end of Q1, with JB's attrition rate significantly reduced to 16% in June from nearly 30% pre-acquisition, and is expected to be closer to 9,000 by Q2 FY27.

With the net debt to EBITDA at 2.07x, Torrent Pharma maintains a disciplined approach to capital allocation. Management stated a preference for India-first opportunities for future strategic investments, but would consider mid-size international acquisitions if suitable domestic opportunities are not available. The company aims to keep its net debt to EBITDA ratio below 3x to 3.5x when evaluating new strategic options, ensuring financial prudence.