Granules India Ltd. share price target

Maintain BUY with a revised TP of Rs 185 (16x June19E EPS). After several quarters of muted top-line growth, GRAN reported 10.2% growth in 1QFY18. Top-line came in at Rs 3.78bn, 5% ahead of estimates. The EBITDA margin at 20.3% was up 40bps YoY, in-line with expectations. While the gross margin expanded ~330bps YoY owing to the improving business mix, higher operating expenses prevented further expansion in the EBITDA margin. PAT was Rs 368mn, down ~5%YoY, largely owing to lower other income (Rs 4mn vs Rs 30mn YoY) and a higher tax rate.

Granules India Limited (GIL) reported a top line of INR 386 cr, showing an annual growth of 10%. The strong uptick in numbers has been primarily on account of higher formulations...

Granules India Limited (GIL) is an integrated Active Pharmaceuticals Ingredients (API), Pharmaceutical Formulation Intermediates (PFI) and Finished Dosages (FD) player with global presence.

Granules Indias (GRAN) top line declined 4% YoY in 4QFY17, albeit on a high base. The EBITDA margin at 21.8% was up 50bps YoY (93bps miss). PAT stood at Rs 457mn, up ~40%YoY. The profitability boost was on account of the heightened gross margin (~56%, ~950bps expansion YoY), which was mainly on account of the changing product mix. Going ahead, we expect this to normalise to ~50%.

Subdued quarter on revenue front: JV supported earnings Granules (GIL) earnings came below our estimate. The company posted revenues of Rs 3,553mn with 1.2% YoY declines which was below our estimate. EBITDA margin, at 21.8%, was below our estimate. Adj. PAT at came below estimate at Rs 457mn (Incl. JV share Rs94mn) with 37.6% YoY growth....

Granules India is a south based, fast growing global pharmaceutical company. GIL has presence across entire pharma value chain from Active Pharmaceutical Ingredients (APIs) to Pharmaceutical Formulation Intermediaries (PFIs) to Finished Dosages (FDs). It has a strong presence in first line of defense' products such as Paracetamol, Ibuprofen and Metformin. Currently, company has eight manufacturing facilities spread over India, China & US. Company operate in 75 countries, with over 300 customers across the globe & about 60% of...

Buy Granules India Ltd CMP at Rs. 126 and add on declines Rs. 135 - Rs. 125 for the Targets of Rs. 155 - Rs. 170

GRAN's profit for 4QFY16 at INR 332m (up 48% YoY) was in line with our estimate. However, the operational number was 13% ahead of forecast, on the back of a better product mix and improving productivity at the plant level. EBITDA margin...

Kumar Saurabh (Kumar.Saurabh@MotilalOswal.com); +91 22 3982 5584 Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P; Capital....