Here's why Torrent Pharma shares tanked over 16% today

Shares of Torrent Pharmaceuticals Limited (TRP) plunged over 16 per cent to hit an intraday low of Rs 2,642.05 today after the firm reported a weak set of numbers for the quarter ended December 2021.
 
The company reported a 16 per cent year-on-year decline in its consolidated net profit for the October-December quarter at Rs 249 crore as its US business registered a 20 per cent decline in revenue.
 
The company's total revenue rose 6 per cent to Rs 2,108 crore during the quarter, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 5 per cent to Rs 585 crore.
 
The stock opened 7 per cent lower at Rs 2,940 against the previous close of Rs 3,160.55. At 11:50 hours, the shares were trading 15.6 per cent lower at Rs 2,665.45. The market cap of the firm fell to Rs 45,105.47 crore.
 
Brokerage house Motilal Oswal noted that the US Generics business remains the major drag on overall performance, with a lack of new approvals and a steep price erosion in the base business. Domestic Formulation (DF) remains in good stead, with healthy better-than-industry performance.
 
“We reduce our FY22E/FY23E/FY24E EPS estimate by 13 per cent/7.5 per cent/3.5 per cent to factor in a lack of new ANDA approvals from Indrad/Dahej, severe price erosion in the US base business, weak demand at the industry level, higher competition delays in Germany, and greater logistic cost,” the brokerage house said.
 
It expects 26 per cent earnings CAGR over FY22-24E, led by a 13per cent/12 per cent/10 per cent/9 per cent sales CAGR in DF/Europe/US/LatAm segment and a 290bp margin expansion over FY22-24E.
 
"We value TRP at 26x 12-months forward earnings and roll our TP to INR 2,880. After two years of strong YoY earnings growth, TRP may exhibit a YoY earnings decline in FY22. While TRP may deliver sustained industry outperformance in the DF market, the prolonged delays in USFDA inspections continue to act as a headwind in the US business and are impacting its overall performance,” Motilal Oswal said in its report.
 
“The earnings upside over the next two years is adequately priced in the current valuation and hence maintain our Neutral rating," it added.
 
The company's board also approved an interim dividend of Rs 25 per share during its meeting on Tuesday.