18 July 2020 Post delivering spectacular earnings growth (76% YoY) in FY20, Granules Indias (GRAN) posted strong revenue/EBITDA/PAT in 1QFY21. This was led by new launches in formulations (FDs) and better market penetration for intermediates (PFIs). We have raised our EPS estimate by 12%/6% for FY21/22E to factor in (a) the increased FD business on account of ANDA launches in the US, (b) addition of new molecules in the API segment, (c) increased traction in existing products, and (d) improving profitability due to backward integration. We value GRAN at 14x 12M forward earnings to arrive at price target of INR315. GRANs 1QFY21 sales were up 23.6% YoY to INR7.4b (v/s est. INR6.7b), led by 35% YoY growth in FDs (INR3.9b; 52% of sales) and 45% YoY growth in intermediates (INR1.4b; 19% of sales). API sales (29% of sales) declined moderately by 1% YoY, affecting overall growth to some extent. Adjusting for the same, Gross Margin (GM) for the company stood at 60.3% and expanded 990bp YoY, led by larger share of FDs and PFIs.