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Torrent Pharma surpasses Zydus Cadila in m-cap

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ET Health
16th May, 2019 11:43 IST
Ahmedabad: Cadila Healthcare Limited is no more Gujarat’s most valued pharma company by market capitalisation.

It has been replaced by its competitor Torrent Pharmaceuticals Limited, which now has Rs 991 crore more in m-cap than Cadila Healthcare, popularly known as Zydus Cadila.

With its stock hitting a yearly low, Cadila Healthcare’s m-cap has dwindled to Rs 26,638 crore as compared to Torrent Pharma’s Rs 27,629 crore on May 15. With Rs 29,658 crore m-cap, Zydus was ahead of Torrent till last week.
Sustained erosion in market cap has cost Zydus its coveted title of the most valued pharma company from Gujarat. Over the last 12-month period, the firm’s m-cap has eroded by whopping Rs 12,720 crore with its share price declining by 32.31% from Rs 384.45 to Rs 260.20. The company’s market cap was Rs 39,357.78 crore as on May 15, 2018.


On the contrary, Torrent Pharma’s share price increased by 21% to Rs 1,632.70 from Rs 1,349.50 resulting in an increase of Rs 4,792 crore in its market cap during the same period.

Citing reasons for Cadila Healthcare’s poor performance on bourses, city-based stock analyst Nilesh Kotak said, “Recently, the company’s plant at Maraiya received 14 observations from the US Food and Drug Administration. Its US subsidiary- Zydus Pharmaceuticals Inc-is also among the generic drug firms facing lawsuits filed by the US states.” Kotak added, “The acquisition of Kraft Heinz’s India business by its wellness arm was expensive. All these factors have weighed heavily on the company’s stock.”

“Since March 2016, Zydus Cadila’s borrowing and interest outgo has increased. Although the company has achieved growth in sales, its profit growth has eased. Over the last three fiscals, the company’s average profit growth has declined to 15%, which was around 22% during the five-year period before that,” Kotak added.

Terming Cadila Healthcare and Torrent Pharma both as good companies, another stock analyst from the city, Bhavin Shah, said that Torrent Pharma made a few acquisitions that has fueled its growth of late. Hence, Torrent is trading at 2.5 times the PE multiple of what Cadila Healthcare currently trades at. Essentially the market believes Torrent can grow at a much faster rate than Cadila in future.
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