TORNTPHARM - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.1

📊 Fundamental Analysis of TORNTPHARM (Torrent Pharmaceuticals Ltd.)

✅ Strengths

Excellent Return Metrics

ROCE: 27.0%

ROE: 26.5% — both signal top-tier capital efficiency

Strong Earnings Growth

PAT Qtr: ₹548 Cr vs ₹515 Cr — consistent upward trend

Qtr Profit Var: 19.9% — healthy growth

EPS: ₹59.2 — robust earnings base

Technical Strength

RSI: 79.4 — overbought, but confirms strong momentum

MACD: 97.6 — bullish crossover

Price above DMA 50 and DMA 200 — confirms uptrend

Moderate Debt: Debt-to-equity of 0.42 — manageable leverage

DII Confidence: +0.29% — domestic institutions increasing stake

⚠️ Concerns

High Valuation

P/E: 63.1 vs Industry PE of 34.0 — richly valued

PEG Ratio: 2.98 — growth priced in

Low Dividend Yield: 0.85% — not ideal for income-focused investors

FII Exit: -0.22% — slight reduction in foreign holdings

RSI Overbought: 79.4 — short-term correction likely

📉 Valuation & Ideal Entry Zone

Given current price of ₹3,768 and technical overextension

Ideal Entry Zone: ₹3,300–₹3,450

Near DMA 50 and below psychological ₹3,500

Wait for pullback to enter with better margin of safety

🧭 Long-Term Investment Outlook

TORNTPHARM is a high-quality pharma compounder with excellent return metrics and consistent earnings growth. Despite its premium valuation, it remains a strong candidate for long-term investment.

Hold if already invested, and consider adding on dips

Holding Period: 5+ years — ideal for compounding in a defensive, growth-oriented sector

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹3,900–₹4,000

Near psychological resistance and peak RSI

Full Exit: If ROE/ROCE drop below 20% or PEG rises above 4 without earnings acceleration

Reinvest only if valuation compresses and EPS growth sustains

Would you like a comparison with peers like Sun Pharma or Cipla to evaluate relative strength and valuation?

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