Nomura Financial Advisory and Securities has maintained 'Buy' on Torrent Pharmaceuticals with revised target price of Rs 1,373 from Rs 1,278 in its report.

Commenting on the investment rationale, Nomura said, ''Torrent's performance in Q4FY15 was below our expectation. Although revenue was in line with our expectation, higher employee costs and other expenses had an adverse impact on EBITDA. Employee costs increased by 18% q-q on account of: (a) restructuring of leave policy which led to leave encashment in Q4 and can be treated as a one-off; and (b) an increase in pension liability due to a decline in interest rate.

EBITDA margin came in at 14%, vs our expectation of 19.8%. Other income at Rs 1 billion was higher than our expectation on account of forex gains. In terms of regional performance, Brazil reported strong growth of 33% y-y in constant currency and an USD 8 million q-q increase in US reported sales.

We increase FY16/17F EPS by 32%/7% on better-than-expected gAbilify pricing, a stronger-than-expected pick up in the performance of the Elder portfolio, currency movements and Q4FY15 performance. We value the stock at 23x FY17F EPS of Rs 59.7 to arrive at our TP of Rs 1,373. The stock trades at 22.4x/21.1x FY16F/FY17F EPS of Rs 56.1/Rs 59.7.''  

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