Motilal Oswal has maintained its “Neutral” rating on Torrent Pharmaceuticals, setting a price target of ₹3,430, which implies modest upside of around 3% from current levels. The brokerage’s stance reflects both the strategic potential and execution risks linked to Torrent’s ambitious plan to acquire JB Chemicals & Pharmaceuticals (JBCP).
Here’s a closer look at what’s driving this cautious optimism:
Portfolio Expansion Brings Growth—and Challenges
The acquisition would give Torrent access to JBCP’s fast-growing domestic formulation business, which includes a strong chronic care portfolio.
Torrent plans to purchase up to 46.4% stake in JBCP for ₹11,900 crore (₹1,600 per share) and will also launch a mandatory open offer for an additional 26% stake.
Post-merger, JBCP’s ₹2,300 crore domestic sales and 2,800+ field force will integrate into Torrent’s existing ₹6,400 crore India business, creating potential synergies across therapies.
However, Motilal Oswal cautioned that successful integration and a clear strategy for cross-selling will be critical to unlock value from the combined entity.
Valuation: Strategic Sense, But No Bargain
Motilal Oswal noted that while the deal is consistent with Torrent’s expansion goals, the valuation is not exactly cheap.
Torrent is paying:
- 30.7× FY26E earnings (27× FY27E)
- 22× FY26E EBITDA
These multiples are lower than Torrent’s own 47× FY26 earnings, but still significantly above sector averages.
In the brokerage’s words:
“Valuation supports strategic rationale, but does not leave much room for re-rating.”
Funding Mix Could Pressure Near-Term Earnings
Torrent already carries about ₹2,250 crore of net debt. If the acquisition is funded entirely through borrowing, Motilal Oswal estimates an earnings dilution of around 10.5% in FY27 due to higher interest costs.
Outside of the JBCP deal, Torrent is expected to deliver a healthy growth trajectory with:
- 12% revenue CAGR
- 14% EBITDA CAGR
- 23% PAT CAGR over FY25–FY27
Motilal Oswal continues to value Torrent at 38× 12-month forward earnings, supporting the ₹3,430 target price.
Bottom Line
While the acquisition could strengthen Torrent’s presence in chronic therapies and expand its domestic portfolio meaningfully, the brokerage believes the limited upside from current levels warrants a Neutral stance.
For investors, the big question will be how effectively Torrent manages integration and balances funding to avoid a drag on profitability.
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