Torrent Pharma shares rise 4% on USFDA’s EIR for Gujarat facility

Torrent Pharmaceuticals recently saw a significant boost in its stock price, rallying 4% to reach a new high of ₹3,574 on the BSE. This surge followed positive news from the US Food and Drug Administration (USFDA), which issued an Establishment Inspection Report (EIR) for Torrent's manufacturing facility in Indrad, Gujarat. The news has generated interest among investors looking to buy shares online, especially as Torrent Pharma continues to demonstrate strong performance in the pharmaceutical market.

USFDA inspection and its impact on Torrent Pharma

Torrent Pharma’s facility in Indrad, Gujarat, underwent a Pre-Approval Inspection (PAI) and a Good Manufacturing Practice (GMP) inspection by the USFDA from June 3 to June 12, 2024. Following the inspection, the company was issued a Form 483 with five observations. However, the recent issuance of the EIR with a Voluntary Action Indicated (VAI) classification has closed the inspection successfully.

The VAI classification indicates that while the USFDA found some objectionable conditions, they do not warrant any immediate regulatory or administrative action. This outcome is favourable for Torrent Pharma, as it allows the company to continue its operations without any disruptions.

Torrent Pharma’s strong market performance

Over the past year, Torrent Pharma has significantly outperformed the market, with its stock price soaring by 94%, compared to a 27% rise in the BSE Sensex. Torrent Pharma is the fifth-largest player in the Indian pharmaceutical market (IPM), focusing heavily on chronic and sub-chronic therapies. These segments contributed to 75% of its FY24 revenues. 

The company is also among the top five players in key therapeutic areas such as cardiovascular (CVS), central nervous system (CNS), vitamins, minerals, and nutrients (VMN), and gastrointestinal (GI).

Recent credit rating reaffirmation

Adding to its strengths, Torrent Pharma recently had its long-term credit rating reaffirmed by ICRA. The rating agency maintained the company's rating at 'ICRA AA+/Stable' for its banking facilities and non-convertible debentures and 'ICRA A1+' for its commercial paper program. This reaffirmation reflects Torrent Pharma’s strong financial profile, characterised by healthy profitability, robust credit metrics, and strong liquidity.

Analysts’ positive outlook on Torrent Pharma

Financial analysts have a positive outlook on Torrent Pharma, citing several factors that contribute to its strong market performance.

• Sustained profitability: According to ICRA, Torrent Pharma’s profitability continues to improve, driven by operating leverage, cost control measures, and a growing presence in branded generics markets. These factors support the company's margins, which are expected to remain strong.
• Broader market growth: Analysts at Centrum Broking also remain optimistic about Torrent Pharma’s future, pointing to the sustained growth in its domestic formulations (DF) business, particularly in key brands like Shelcal and Tedibar.

The company’s consumer health portfolio and its growth in markets like Brazil and Germany are also expected to drive future success.

Key takeaways

If you want to buy shares online, here are some key points about Torrent Pharma:

1. Positive USFDA inspection outcome: The successful closure of the USFDA inspection with a VAI classification is a significant achievement for Torrent Pharma, reducing potential regulatory risks.
2. Strong market performance: With a 94% increase in stock price over the past year, Torrent Pharma has outperformed the broader market, indicating strong investor confidence.
3. Strong financial profile: ICRA's reaffirmation of Torrent Pharma’s credit ratings reflects its solid financial health and profitability.

Positive growth outlook: Analysts remain optimistic about the company's future, citing growth in key markets and successful cost-efficiency measures.