Strong domestic outlook remains key growth driver for Torrent Pharma

Cost savings could drive Torrent Pharma's margins higher in the near term

After a healthy performance in the March quarter (Q4), expectations of margin expansion and continued outperformance in the Indian and Brazilian markets are positives for Torrent Pharmaceutic­als. The stock of India’s fifth-lar­gest pharma company by market capitalisation has risen over 10 per cent since its lows in May.

Ambit Capital recently upgraded the stock on expectations of recovery in Indian chronic therapy sales, tangible progress on cost optimisation, and lower drag from the troubled US and German businesses, besides more reasonable valuations.

The near-term trigger is the improvement in operating profit margins in the current financial year. After reporting a 372-basis-point fall