₹80 से ₹280 केबल 1 साल में छोटा फार्मा शेयर

Dear investor,

Please find below mentioned short term fundamental stock for delivery purpose.

 Fundamental

• Market Cap:  6,940 Cr.
• Current Price:  280
• 52 weeks High / Low  282.00 / 84.00
• Book Value:  74.56
• Stock P/E: 20.20
• Dividend Yield: 0.36 %
• ROCE: 14.75 %
• ROE: 16.71 %
• Sales Growth (3Yrs): 18.86 %
• Listed on BSE and NSE
• Company Website
• Face Value:  1.00

• PEG Ratio: 0.79
• Promoter holding: 42.12 %
• Pledged percentage: 8.64 %
• Debt:  793.21 Cr.
• Price to Earning: 20.20
• EPS:  14.31
• Net profit:  363.61 Cr.
• Profit growth: 28.25 %
• Profit growth 7Years: 34.37 %
• Net profit preceding 12months: 335.40 Cr.
• Profit growth 3Years: 24.35 %
• Dividend yield: 0.36 %
• Debt to equity: 0.43
• Sales last year:  2,279 Cr.
• Sales growth: 13.12 %
• Unpledged promoter holding: 38.48 %
• Investments:  19.34 Cr.
• Intrinsic Value:  180.03

	CMP	Target	BSE Code	NSE Code
	280	340	532482	GRANULES

 

Granules India Limited is a large-scale vertically integrated company, headquartered in Hyderabad. It manufactures Active Pharmaceutical Ingredient (API), Pharmaceutical Formulation Intermediate (PFI), and Finished Dosage (FD). Granules’ business operations are divided into three areas – Core business, Emerging Business, and Contract Research & Manufacturing Services (CRAMS). The company has 8 manufacturing sites (7 in India and 1 in the USA) with presence across 75+ countries and is the world’s largest PFI facility.

 

Investment rationale
 

Fast-growing integrated player, focusing on expanding capacities: Granules is a fast-growing pharmaceutical player focusing on volume-based products such as Paracetamol, Metformin HCl, Ibuprofen, Guaifenesin, Methocarbamol and newly added Losartan, Cetrizine and Fexofenadine. It has fully integrated infrastructure including R&D, manufacturing, and marketing to enable “Make in America”. It is fully integrated across all product value chain viz API-PFI and FD (Active Pharmaceutical Ingredients- pre-formulation Ingredients to Finished Doses). It derives nearly 80% of revenue from the export market primarily the USA, Europe, and Canada. It has the world’s largest PFI (Pharmaceutical Formulation Ingredients) capacity. It has been progressively investing in expanding capacities to leverage economies of scale. Granules is one of the world’s largest quality-conscious API manufacturers in terms of volume. It has an API capacity of 39,360 MT, PFI capacity of 24,640 TPA, and FD capacity of 21.3 billion doses. 

 

Strong R&D capabilities, aggressive product pipeline: Granules has been passionately translating science and technology into pharmaceutical development and manufacturing, marking its presence globally. Its strong R&D capabilities are the driving forces for current and future momentum and growth. The company has over 50 scientists working on products that strengthen its competitive position in the market and focuses on a differentiated portfolio. Its R&D team aspires to focus on different classes of projects. Granules has recently ventured into the CRAMS business through Granules-OmniChem, a 50-50 joint venture with Ajinomoto OmniChem. Ajinomoto OmniChem works with branded pharmaceutical companies and makes patent-protected products for regulated markets. Going forward, when these products go off-patent, customers will be able to retain market share by shifting to the products made at Granules- OmniChem. Granules India has 74 patents in its kitty including 55 in India and 4 in the USA. It has filed 39 ANDAs of which 20 are approved. In API, it has 18 US and 7 European DMFs. The company is continuously adding 7-8 ANDAs every year to expand its product base. 

 

Strong growth guidance for the near term: With a healthy set of numbers for FY20, the management maintained revenue growth guidance of 20% and 25% earnings growth over the next three years. The company continues to reduce its debt as Net Debt to EBITDA is now stands at 0.8x as of June 2020 versus 1.8x a year back. Strong performances are noted across areas like Margins, return ratios, and revenue. The key growth drivers are the expansion of no. of molecules to 7, expansion of capacities in (API + FD) high volume products (paracetamol, metformin, ibuprofen, guaifenesin, and methocarbamol), widening existing portfolio into several dosage forms and expanding global footprints. The company will focus on timely launches of 9 products in FY21 while also increasing the market share of existing products by passing on cost benefits realized through operational efficiencies. 

 

Outlook & Valuation: Granules has shown strong performance over the last few quarters with revenue and profits showing an acceleration in growth. Three years CAGR growth of revenue and profits are ~20% and ~25% respectively. For FY20, Granules has generated positive free cash flows of Rs 265 cr against negative free cash flows of Rs 38.2 cr during FY19. The company during FY20 has reported 14% and 41% YoY growth in net sales and profit respectively. Operating margins improved by 400 bps to 20% for FY20 which now further jumped to 25% for Q1FY21. Amidst the uncertainty over the recovery aspect from the global pandemic, we continue to remain bullish on the pharma sector. At the current price, the stock is trading at 19x of its TTM June 2020 earnings.
 

Duration of recommendation: Short to Medium term.

Note : Before investment advice your financial advisor.