Reliance Securities downgrades Torrent Pharma to hold, target price Rs 1,740

Reliance Securities has downgraded Torrent Pharmaceuticals to hold from buy in the long term with a target price of Rs 1,740. Shares of Torrent Pharmaceuticals ended up 1.4% at Rs 1,690.10 on Thursday while the BSE Sensex closed 297.55 points down at 37,880.40.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 1976.00 crore, up 8.45% from last quarter sales of Rs 1822.00 crore and up 7.74% from last year same quarter sales of Rs 1834 crore. The company has reported net profit after tax of Rs 216.00 crore in the latest quarter.


Investment Rationale

The brokerage downgraded Torrent after the US FDA issued a warning letter to the company's Indrad API and formulations facility. This warning letter is based on the Corrective & Preventive Action (CAPA) submitted by TRP to the observations raised by US FDA, said Reliance Securities. The brokerage expects new product approvals will be impacted in future.