Outlook and Valuation. Its dominance in key APIs (paracetamol, ibuprofen, metformin) would help Granules emerge a prime beneficiary as the Covid-19 outbreak has led to a surge in demand for such drugs. Granules is likely to retain strong traction for the next couple of years driven by formulations and the healthy contribution from new capacities. We expect ~25%/~23% revenue/PAT CAGRs over FY20-22. At the CMP, the stock trades at 9x FY22e EPS of `20. Risks: 38% of promoters' holdings have been pledged;...
At 10.7x FY22E EPS, although valuations don't appear very cheap, but given that the company has sufficient capacities to generate revenues of Rs 56bn and has a strong execution record, pre qualifications most all leading institutional clients, pan India distribution network, sufficient cash reserves to fund greenfield capex incase demand picks up sooner, stable debt levels at Rs 3bn levels and fairly stable margins(~10%), we feel the company is well poised to capture growth when the...
In view of the current situation, management stated that the company is expanding its e-commerce presence with enhancing online channels, allowing delivery in more than 1300 cities and rolling out home delivery. Additionally, the company is focused on several cost management efforts including rental negotiations, closure of unviable stores and thrust on digitization across the organization to boost...
