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  1. Torrent Pharma-JB Chemicals deal: Not a surprise to us, say Nomura, HSBC; check key points

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Torrent Pharma-JB Chemicals deal: Not a surprise to us, say Nomura, HSBC; check key points

Upstox

3 min read | Updated on June 30, 2025, 14:46 IST

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SUMMARY

HSBC cautioned that the deal could have a near-term negative impact on earnings due to rising interest costs and amortisation associated with the large transaction.

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Torrent Pharma Ltd

HSBC has maintained positive outlook on Torrent Pharma as it says that the deal will solidify Torrent’s leadership in chronic therapies. | Image: Shutterstock

Torrent Pharma's acquisition of JB Chemicals did not come as a surprise to top global brokerages Nomura and HSBC. They said that it has been Torrent Pharma's strategy to expand inorganically in India.

Torrent will acquire a 46.39% stake from promoters Tau Investment Holdings Pte Ltd (a unit of KKR, the global investment firm) for about ₹11,917 crore. It would additionally buy another 2.80% from certain employees of JB Chemicals at the same acquisition price of ₹1,600 per share (totalling ₹719 crore).

Post this, it would make an open offer for buying 26% from the open market, as per listing norms, at a price of ₹1,639.18 per share (totalling ₹6,842.8 crore).

The open offer price is at a discount to Friday's closing price of ₹1,799.35 apiece for JB Chemicals on the BSE.

This will be the second biggest deal in the pharma sector ever, behind Sun Pharmaceutical Industries' 2015 acquisition of Ranbaxy Laboratories.

"Torrent Pharmaceuticals Limited and global investment firm KKR today announced that Torrent has entered into definitive agreements to acquire a controlling stake in J B Chemicals and Pharmaceuticals from KKR at an equity valuation of ₹25,689 crores (on a fully diluted basis), followed by a merger of the two entities," a company statement said.

Nomura in a note to its clients said that not come as a surprise, given Torrent’s historical focus on inorganic growth, particularly in India. It highlights that Torrent has a track record of value-accretive acquisitions, which may give investors confidence in the strategic rationale behind this deal.

“The India product portfolio of JB Chemicals is complementary to Torrent’s, which should support long-term integration benefits,” Nomura said.

Meanwhile, HSBC has maintained positive outlook on Torrent Pharma as it says that the deal will solidify Torrent’s leadership in chronic therapies within India and provide access to JB’s international Contract Development and Manufacturing Organisation (CDMO) capabilities—a segment with global growth prospects.

“This acquisition marks the next leg of growth for Torrent Pharma. While the size of the deal is larger than Torrent’s previous acquisitions, it reinforces their intent to scale aggressively,” HSBC noted.

However, HSBC cautioned that the deal could have a near-term negative impact on earnings due to rising interest costs and amortisation associated with the large transaction.

Following the announcement of acquisition shares of Torrent Pharma rose as much as 3.89% to hit an intraday high of ₹3,474.60 while shares in JB Chemicals and Pharmaceuticals fell as much as 6.88% to hit an intraday low of ₹1,675.45 on the BSE.

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