Torrent Pharmaceuticals Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Damayanti Kerai - HSBC - Analyst : My question is regarding insulin CMO business. So you have started supplies again. And correct me if I'm wrong, you earlier mentioned the normal run rate for this segment is INR75 crores to INR80 crores per quarter, right?

Question: Damayanti Kerai - HSBC - Analyst : Okay. So in fourth quarter, do you expect full recovery to come in plus some spillover or it will go back to the normal level of sales?

Question: Damayanti Kerai - HSBC - Analyst : Okay. Okay. And this business revenue is largely passed on to EBITDA, right? It's a service business?

Question: Damayanti Kerai - HSBC - Analyst : Understood. My second question is on Brazil. So in constant currency, you maintain good growth and outpacing the overall market growth. But in view of the currency depreciation, should we assume like similar trends to continue the way we have seen in second quarter, third quarter? And I just want to confirm, fourth quarter is generally the largest quarter for you in Brazil, right? So whether that will play out this fiscal or because of its currency, we might not see it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 12:30PM, TORP.NS - Q3 2025 Torrent Pharmaceuticals Ltd Earnings Call

Question: Damayanti Kerai - HSBC - Analyst : Okay. And my last question, if you can update us on your gross debt or net position as of December quarter?

Question: Damayanti Kerai - HSBC - Analyst : 0.51, okay.

Question: Sumit Gupta - Centrum India - Analyst : Can you provide a split of volume price in new products for the Indian market?

Question: Sumit Gupta - Centrum India - Analyst : Okay. And it will be 5% to 6% in price, I suppose?

Question: Sumit Gupta - Centrum India - Analyst : Okay. Okay. Understood. Understood. And sir, how many MRs are there at the end of Q3?

Question: Neha Manpuria - Bank of America - Analyst : Aman, sorry, I couldn't hear your comment on the cardiac weakness and what's driving that and how we are trying to address that? So apologies, but if you could please repeat that for me?

Question: Neha Manpuria - Bank of America - Analyst : I think in the opening comments, you mentioned about some weakness in the Cardiac segment and some restructuring there, I couldn't quite catch it.

Question: Neha Manpuria - Bank of America - Analyst : Okay. Is there any other segment in India where you're seeing growth probably not in line with our expectation, and therefore, requires more work and where exactly are we adding the 500 MRs that we've increased in this last year?

Question: Neha Manpuria - Bank of America - Analyst : The MR addition, which areas have you added the 500 MRs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 12:30PM, TORP.NS - Q3 2025 Torrent Pharmaceuticals Ltd Earnings Call

Question: Neha Manpuria - Bank of America - Analyst : Understood. Okay. That's helpful. My second question, Sudhir, the BRLimpact would probably have been there in the SG&A cost as well, right? Is

Question: Neha Manpuria - Bank of America - Analyst : Is there anything else? And how much of it was the decline is the BRL? And is there any other factor you'd like to highlight?

Question: Neha Manpuria - Bank of America - Analyst : Okay, okay. And this INR10 crores to INR11 crores given the currency continues where it is will probably even continue in the next quarter at least, still the time currency --

Question: Tushar Manudhane - Motilal Oswal Financial Services Ltd - Analyst : So US sales has been pretty stable, in fact, while we continue to get some approvals. But there has been not so meaningful pickup despite the regulatory clearance not in place now for quite some time. So if you could just throw some light in terms of the outlook for US business?

Question: Tushar Manudhane - Motilal Oswal Financial Services Ltd - Analyst : Understood. And sir, what is the gross margin for the insulin business?

Question: Tushar Manudhane - Motilal Oswal Financial Services Ltd - Analyst : I mean, interestingly, this -- despite this business reducing, you're not seeing the reduction in the gross margin or that is getting sort of more than offset by the other segment? How to think about it?

Question: Tushar Manudhane - Motilal Oswal Financial Services Ltd - Analyst : And lastly, if you could share now, it's been quite some time there and, in fact, the traction has been very positive for consumer shelf business. So if you could share what kind of revenue you are getting from this on a quarterly basis in terms of price, volume, if it all you can further breakdown?

Question: Abdulkader Puranwala - ICICI Securities - Analyst : Just first on Brazil revenue. And in the past, you've talked about some constant currency growth of mid-teens kind of a range. And then we had one or two product approvals also. So in Brazil, if you could help us understand what is the base business growth excluding the launches what you have done in the recent past?

Question: Abdulkader Puranwala - ICICI Securities - Analyst : Okay. Got it. And second is on the new tenders what you expect to come in Q2 of next year, what should that translate in terms of growth for Germany? I mean, how should we look at Germany panning out for next year in terms of growth?

Question: Abdulkader Puranwala - ICICI Securities - Analyst : Got it. And sir, just a final one on India and Brazil. So I mean, considering the GLP products which is going up, catering in both of these markets in March '26. So I mean, what is the launch strategy here? Are we going to be among the first wave of launches? Have we already started filing this product in those markets? Or we'll wait for the market formation to happen and then decide the strategy? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 12:30PM, TORP.NS - Q3 2025 Torrent Pharmaceuticals Ltd Earnings Call

Question: Damayanti Kerai - HSBC - Analyst : Sir, my question is regarding India market. So like obviously, you continue to outpace the market growth. But according to you, like why we are seeing this muted volume trend in market for like a prolonged period of time? And how do you see this moving up in coming periods?

Question: Damayanti Kerai - HSBC - Analyst : Sure. And my last question is tax and interest expense during the quarter -- third quarter were, I guess, less than the previous quarter, et cetera. So are these the new base? Or how should we look at tax rate and interest expense in coming quarters?

Question: Damayanti Kerai - HSBC - Analyst : Starting '26, right?

Question: Damayanti Kerai - HSBC - Analyst : Okay. And just on the debt reduction part. So you will be cash positive most likely in the second half of FY26 with more repayments happening?

Question: Nitin Agarwal - DAM Capital - Analyst : On the markets, the RW markets, we've had a reasonably flat number of close to INR300 crores for the last few quarters now. How should we think about the growth outlook for this piece?

Question: Nitin Agarwal - DAM Capital - Analyst : That's helpful. And secondly, you touched upon this India and Brazil GLP-1 launches. But I mean, forget in terms of what -- keeping aside what we intend to do in the market, what is your take on -- I mean how does a broader GLP-1 market really shape up in India and Brazil upon market formation? Do you see that being a seriously large opportunity for all the players involved or there could be some negative surprises here?

Question: Nitin Agarwal - DAM Capital - Analyst : And actually Sudhir, what is the normalized level for this insulin business on an annualized basis?

Question: Nitin Agarwal - DAM Capital - Analyst : Okay. But in the past, we used to report close to INR150 crores-odd in this business, what -- there is more to it than the insulin part in this business?

Question: Nitin Agarwal - DAM Capital - Analyst : Okay. So basically, whatever that you report in others, we knock off on annualized, this is INR300 crores from here, rest all is RW sales?

Question: Vivek Agrawal - Citigroup - Analyst : My question is related to the broader picture on margins. In this quarter, we have seen impact of different factors like insulin, currency, et cetera. So it would be helpful if you can give some color on how to look at the overall margins in 4Q as well as the next year and some of these factors that impacted this quarter might get reversed?

Question: Vivek Agrawal - Citigroup - Analyst : Understood. That is very clear. And on GLP-1, actually, you have mentioned that you are confident of getting significant share in the state. So what makes you confident if you and to clarify on this?

Question: Vivek Agrawal - Citigroup - Analyst : So is it fair to assume that the product is largely going to be prescribed by the diabetologist, cardiologist, et cetera, and the companies who have a strong presence in this segment, how I find the (inaudible)?

Question: Vivek Agrawal - Citigroup - Analyst : Understood. And just last question again on GLP-1, it will be required to conduct a clinical trial before the finance submission. So how you move that progress as far as the clinical trials, et cetera?

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Sudhir, just first one on your comments on the whole net cash in the next couple of years. So I want to understand what are the capital allocation priorities? We typically never reached there, we announced an acquisition before, historically I'm saying. So just want to understand what are some of the priority areas for us in terms of allocating this statutory?

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Sudhir, just in terms of areas, I'm not asking for the transactions you're looking at, but I'm just saying what are the areas, is it India, is there any rank order of which geographies or therapy areas? Is there any non-India geographies you're looking at? So any broad directional color is what I mean?

Question: Shyam Srinivasan - Goldman Sachs - Analyst : Understood. And from a valuation perspective, I think that's been one of the key pushbacks from your end to making these transactions. I know maybe it's early days on India overall market correction. But are you seeing assets or in your BD discussions are you seeing transactions which are

Question: Madhav Marda - Fidelity Group - Analyst : Just one question from my side on the GLP-1 for the India market. What could be our sort of supply chain strategy? Like do we plan to make it and how -- will it be completely outsourced because there is -- at least for that basic understanding is that you need to get the API, then there is a formulation and then there's the assembly still finish, et cetera, so there's quite a few steps. So do we plan to completely outsource everything or would we do something in-house? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 12:30PM, TORP.NS - Q3 2025 Torrent Pharmaceuticals Ltd Earnings Call

Question: Madhav Marda - Fidelity Group - Analyst : By partner, you mean it could be fully outsourced? The production should be by the finished unit and (inaudible) in the market, is that right?

Question: Madhav Marda - Fidelity Group - Analyst : Okay. So just one follow-up. At least, again, very basic understanding of this space is that, generally, for injectables, it's better to have the production in-house because only then the margins are good. Otherwise, a lot of the margin is captured by the manufacturing partner. Is that the right understanding for injectable GLP-1s as well or not?

Question: Vivek Agrawal - Citigroup - Analyst : Again, this is related to GLP-1. As the market has not formed yet, and if let's say post commercialization, post market formation, if there is a kind of negative surprise, right? So what do you think this is? Whether it's going to be the demand side challenges or do you think it can be a supply side challenge?

Question: Vivek Agrawal - Citigroup - Analyst : So in the initial one to two years, do you think that there may still be some kind of supply side compliance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 12:30PM, TORP.NS - Q3 2025 Torrent Pharmaceuticals Ltd Earnings Call

Question: Vivek Agrawal - Citigroup - Analyst : Okay. And just one more question. You have mentioned that you are making some kind of investments in the market formation. So can you just clarify what kind of investments you're making in market formation in the sales force, promotion and on what?

Question: Vivek Agrawal - Citigroup - Analyst : Understood. And sir, just a related question on Brazil. So compared to India, how we see market formation in that particular market?

Question: Vivek Agrawal - Citigroup - Analyst : And so last question. So are you more optimistic on India or on Brazil for this particular product?

Question: Anubhav Agarwal - UBS - Analyst : Yes. So I'm just continuing the discussion on GLP only. So one question on India market. So which class of drug under diabetes would this largely displace, will be gliptin which will get impacted? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 12:30PM, TORP.NS - Q3 2025 Torrent Pharmaceuticals Ltd Earnings Call

Question: Anubhav Agarwal - UBS - Analyst : Actually, that's what my second question was because most of the gliptins, even if we take the generic sitagliptin today, the tablet costs about INR10 a day, monthly cost would be about INR150, let's say, twice a day. And unlikely that injection of GLP-1 will be available for less than INR500. So that's the question that was that you were referring to the demand issue that the price difference will be five times of the other option?

Question: Dheeresh Pathak - White Oak Capital - Analyst : The insulin business gross margins are at company average, right?

Question: Dheeresh Pathak - White Oak Capital - Analyst : Like 5% lower, 10% lower range will help?

Question: Dheeresh Pathak - White Oak Capital - Analyst : Okay. And this -- in the Brazil business, what is our net exposure, like we'll have costs also in local currency. So can you share like a net exposure and what the -- how you hedge it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 12:30PM, TORP.NS - Q3 2025 Torrent Pharmaceuticals Ltd Earnings Call

Question: Dheeresh Pathak - White Oak Capital - Analyst : Okay. So just to understand, what percentage of the revenue that you show in Brazil would have cost in local currency? Is it like 40%, 50% of that revenue will have local costs?

Question: Dheeresh Pathak - White Oak Capital - Analyst : That will be roughly 40% at least of the revenue?

Question: Dheeresh Pathak - White Oak Capital - Analyst : Okay. And when you are reporting, they're reporting at the spot exchange rate and the hedge gain or loss, you are showing other expenses that the company is working?

Question: Dheeresh Pathak - White Oak Capital - Analyst : And the hedge win would have shown other expense, right, in other income or other expense, how do you show this? So what I'm asking is you look at spot or you book at the hedged rate when we show the revenue?

Question: Nitin Agarwal - DAM Capital - Analyst : Just a quick one on Brazil. Where are you on your approval process for (inaudible) when do you think the approval will come through?

Question: Nitin Agarwal - DAM Capital - Analyst : But you expect to be -- and this is what the market opening should be happening with (inaudible) in Jan, right? Or do you see a different time for that?

Question: Nitin Agarwal - DAM Capital - Analyst : Yes. Jan '26?

Question: Nitin Agarwal - DAM Capital - Analyst : Okay. Around the time basically for Q1 of -- first calendar quarter of '26?