1 week ago
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Shares of Torrent Pharmaceuticals closed at Rs 3,375 on June 27, up Rs 152.50 (4.73 per cent), as investor interest picked up following the company’s announcement to acquire a controlling stake in JB Chemicals & Pharmaceuticals. The proposed deal, valued at over Rs 25,689 crore, has kept the stock in focus amid expectations of strengthening Torrent’s position in the Indian pharmaceutical market.
Torrent will acquire 46.39 per cent stake in JB Chemicals from private equity firm KKR at Rs 1,600 per share, amounting to Rs 11,917 crore, and will launch an open offer to acquire an additional 26% stake at Rs 1,639.18 per share. The merger agreement also includes a share swap plan under which JB Chemicals shareholders will receive 51 Torrent shares for every 100 JB shares held.
Analyst Commentary
Brokerage firms have broadly welcomed the move but remain cautious about near-term stock performance:
Nomura maintained a Neutral rating with a target price of Rs 3,580, emphasizing that the acquisition fits well within Torrent’s inorganic growth strategy in India. They acknowledged Torrent’s history of successful acquisitions but suggest that upside may be limited until integration progress is clearer.
HSBC retained a Buy rating and set a target price of Rs 3,775, highlighting that the deal will strengthen Torrent’s presence in chronic therapies and add valuable international contract development and manufacturing (CDMO) capabilities.
Jefferies also maintained a Buy stance with a target price of Rs 3,740, noting that the acquisition provides entry into the lozenges CDMO segment focused on exports. Jefferies modeled a net debt-to-EBITDA ratio of 2.5x for the combined entity, assuming 75% debt financing, which they consider manageable.
Market Implications
The strong 4.73 per cent price jump on June 27 indicates investor optimism about the strategic benefits of the acquisition. The deal is seen as a significant step for Torrent to consolidate its leadership in India’s chronic therapies segment and diversify into high-margin international CDMO services.
While some analysts remain cautious, the consensus view favors long-term value creation through this inorganic expansion. Market participants will closely watch regulatory approvals, deal closure, and the integration process to gauge the full impact on Torrent’s earnings and valuation.
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