Torrent Pharma (TRP) is set to acquire Curatio Healthcare (Curatio) for enterprise value of INR19b. While the acquisition will help with the company’s portfolio expansion and widen its reach to dermatologists/paediatricians, the deal valuation is expensive at 6.8x EV/ FY23 sales, 22.4x EV/FY23 EBITDA basis. We reduce our EPS estimate by 2% for FY24 to factor in the Curatio acquisition. We value TRP at 26x 12M forward earnings to arrive at a price target of INR1500. Considering its limited upside potential, we reiterate our Neutral stance on the stock.
We have tweaked our EPS estimate by -2% for FY24 to factor in Curatio acquisition. We continue to value TRP at 26x 12M forward earnings to arrive at a price target of INR1500. While TRP remains a leading player in the DF segment, we reiterate our Neutral rating on its limited upside potential.