Q3FY21 Result Update - Granules India - ICICI Direct

Revenues grew 20% YoY to Rs. 845 crore driven by new launches and higher market share of existing products across segments. Formulations grew 11% YoY to Rs. 422 crore, API grew 20% to Rs. 252 crore and PFI grew 48% to Rs. 171 crore. EBITDA margins improved 187 bps YoY to 25.1% due to change in product mix and higher operational efficiency. EBITDA grew 29.7% YoY to Rs. 212 crore. Adjusted PAT grew 52.8% YoY to Rs. 147 crore. Delta vis-a-vis EBITDA was due to higher other income (one-time Rs. 13.4 crore stimulus money received by US subsidiary).

Valuation & Outlook

Q3 results were above I-direct estimates on all fronts. After achieving critical mass in commoditised but important products in last few quarters, Granules has been steadily expanding its reach into formulations with a vertically integrated model. This bodes well at a time when generic supply script globally is likely to be rewritten in the post-pandemic era that would be more conducive for vertically integrated players like Granules. Apart from a strong quarterly performance, the management is looking to sustain 25-27% EBITDA margins for FY21 with YoY bottomline growth of ~60-70% (similar to FY20). We like Granules' clear vision to play on its strength of economies of scale and gradually expand into more complex products/forms to improve margins. Sustained margin expansion is likely to support FCF generation despite brownfield capex lined up till FY23E. We maintain BUY and target price of Rs. 460, unchanged, at 15x of FY23E EPS of Rs. 30.6).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Granules_Q3FY21.pdf

Shares of GRANULES INDIA LTD. was last trading in BSE at Rs.353.55 as compared to the previous close of Rs. 355.3. The total number of shares traded during the day was 292364 in over 10754 trades.

The stock hit an intraday high of Rs. 366.9 and intraday low of 342.05. The net turnover during the day was Rs. 104509096.

Source : Equity Bulls

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