PL Capital on Torrent Pharma’s ₹119 Bn JB Chemicals Acquisition: A “Strategically Sound, Value-Accretive Move”
- 2nd July 2025
- 04:00:00 PM
- 4 min read
Mumbai | July 2 – Deal positions Torrent as 5th largest Indian pharma company; expands branded generics, CDMO capabilities, and chronic therapy portfolio
“This isn’t just a scale-driven deal — it’s a strategic leap into new therapies, new markets, and new revenue levers,” said PL Capital in its report analyzing Torrent Pharmaceuticals’ acquisition of JB Chemicals.
Torrent Pharmaceuticals Ltd. has announced the acquisition of a 46.4% controlling stake in JB Chemicals & Pharmaceuticals Ltd. from KKR for ₹119 billion, along with a proposed open offer and merger. The move marks one of the largest pharma deals in recent years and significantly strengthens Torrent’s domestic and international portfolio.
The transaction is set to reshape Torrent’s market position, giving it a stronger foothold in chronic therapies, new access to niche therapeutic segments, and an entry into the scalable Contract Development and Manufacturing Organization (CDMO) space — a high-margin, globally relevant vertical.
More Than Just Consolidation
Torrent and JB Chemicals both have strong domestic footprints, but their portfolios are largely complementary. Torrent’s dominance in cardiac, gastro, and neuro/CNS is now supplemented with JBCP’s offerings in ophthalmology, IVF, nephrology, and anti-parasitic therapies.
According to PL Capital, the strategic rationale rests on three pillars:
- Therapy synergy: 65% of JBCP’s revenue comes from chronic therapies — aligning well with Torrent’s high-margin domestic business.
- CDMO boost: JBCP brings a robust CDMO platform with sticky clients, expanding Torrent’s non-formulation revenue.
- Geographic scale: JBCP’s presence in Russia, South Africa, and the US strengthens Torrent’s global footprint.
Post-merger, Torrent’s Rx rank in India will jump from 10th to 4th, and domestic formulation will contribute 56% of the combined entity’s total revenue.
Deal Contours: Stake Purchase, Open Offer, Merger
The deal is multi-layered, involving primary and secondary stake acquisitions, an open offer, and a proposed merger.
| Transaction Element | Details |
| Primary Stake Purchase | 46.4% from KKR at ₹1,600/share |
| Employee Share Purchase | 2.8% at the same rate |
| Open Offer | Up to 26% at ₹1,639/share |
| Implied Valuation (Merger Ratio) | 100 JBCP : 51 TRP shares (₹1,703/share value) |
| Funding Mode | Primarily debt-funded (~₹125 bn) |
| Merger Approval Timeline | 15–18 months (subject to SEBI, CCI, NCLT, etc.) |
Torrent has clarified that the integration will follow the same playbook used for Unichem, Elder, and Curatio — all of which delivered successful synergies over time.
Financial Outlook: Short-Term Dilution, Long-Term Value
While FY27 earnings per share (EPS) will see a temporary dilution (~15%), the deal is expected to turn EPS-neutral by FY28. The combined entity will be cash accretive from Year 1, even after amortization expenses.
Key Financials – Combined Entity
| Metric | FY26E | FY27E | FY28E |
| Revenue (₹ mn) | 1,73,537 | 1,94,301 | 2,17,754 |
| Gross Margin (%) | 69.40% | 69.80% | 70.20% |
| EBITDA (₹ mn) | 55,101 | 63,981 | 75,238 |
| EBITDA Margin (%) | 31.80% | 32.90% | 34.60% |
| PAT (₹ mn) | – | 31,074 | – |
| EV/EBITDA (x) | 26 | 22.4 | 19.1 |
| Net Debt/EBITDA (x) | 2.6 | 1.8 | <0.5 (targeted) |
| RoCE (%) | – | – | 28% (target) |
Torrent aims to bring net debt/EBITDA to below 0.5x within three years, with internal cash flows and synergy gains supporting the deleveraging.
PL Capital Maintains ‘Accumulate’; Highlights Long-Term Upside
At a current market price of ₹3,408, PL Capital has maintained its ‘Accumulate’ rating on Torrent Pharma with a target price of ₹3,850 — implying ~13% upside. While JBCP currently trades at 25x P/E, Torrent trades at 40x P/E on FY27E estimates, suggesting attractive valuation synergy for long-term investors.
“This is a well-timed, well-priced strategic acquisition,” said PL Capital. “It adds therapeutic breadth, improves scale economics, and opens new global and contract manufacturing opportunities.”
What Comes Next?
Over the coming quarters, the focus will be on securing regulatory approvals from SEBI, the Competition Commission of India (CCI), and the National Company Law Tribunal (NCLT). Torrent will also move forward with the open offer and employee share buyback, followed by obtaining minority shareholder approval to complete the merger. A smooth integration process, modeled on past acquisitions, is expected to drive operational synergies between FY26 and FY28. Key priorities will include debt reduction, ramping up the CDMO business, and expanding across high-margin therapy areas. With these milestones in sight, the acquisition positions Torrent as the 5th largest Indian pharma player, enabling deeper penetration into chronic therapies and CDMO — a move PL Capital views positively, maintaining its ‘Accumulate’ rating with a target price of ₹3,850.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
