Nomura maintains 'buy' rating on Torrent Pharma amidst Cipla acquisition buzz

Nomura also points out that acquiring Cipla would provide Torrent Pharma with the much-needed scale and a niche presence in the US generic pharmaceutical space.

Another notable aspect that Nomura sees is costs and synergies in R&D and generics front-end, which could exceed around Rs 1,000 crore.

According to IIFL, this merger would be a better strategic fit for Torrent Pharma than for Dr Reddys, another major player in the pharmaceutical sector. If the deal were to go through, the merged entity of Torrent-Cipla would rank among the top three players in 10 key therapy areas within the domestic market.

Torrent's scale in the US market could increase 6x — it will get access to Cipla’s rich pipeline of inhalation products as well as complex injectables. IIFL have a ‘buy’ call on Torrent with a target price of Rs 2,400, on Cipla with a target price of Rs 1,150 and 'reduce' on Dr Reddys with a target price of Rs 3,900.

Aditya Khemka, Fund Manager at InCred Healthcare PMS, shared his insights with CNBC-TV18, suggesting that the potential deal could have a significant impact on Torrent Pharma. While the outcome remains uncertain, should it come to fruition, it has the potential to be a game-changing move for Torrent Pharma. The key factors to consider are the valuation of the deal and the level of synergy that can be realized. If these aspects align favorably, it could have a highly positive effect. Conversely, if the valuation is not favorable, and the expected synergies do not materialize, it could pose a substantial downside risk.

"We don't know whether it's going to happen. But if it does happen, it is a deal that will be a transformative deal for Torrent Pharma and if it's done at the right valuation, if there is the right amount of synergy that they're able to extract, it can be a very big positive. At the same time, if the valuation is not right, and the synergies are not enough, it can be a big negative as well," he said.