Moneycontrol
Jan 31, 2017 03:49 PM IST IST | Source: Moneycontrol.com

Buy Granules India; target of Rs 160: Motilal Oswal

Motilal Oswal is bullish on Granules India has recommended buy rating on the stock with a target price of Rs 160 in its research report dated January 30, 2017.


Motilal Oswal's research report on Granules India


Finished dosage segment’s revenue grew 33% YoY to INR 1.6b, driven by scale-up in Rx business. Revenue of PFI segment declined 7% YoY, while that of API segment fell 11% YoY to INR 1.2b. Capacity constraints, along with captive consumption of API, led to muted revenue growth. GRAN expects revenues to bounce back, led by expanded capacity in API and PFI segments.


Outlook
GRAN trades at 10x FY19E EPS. We believe the stock has the potential deliver >50% return over next 12-18 months, led by multiple re-rating (to >15x forward earnings) and strong EPS CAGR of 30%. Our TP of INR 160 is based on 16x 1HFY19E PER.

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