Buy Granules India; target of Rs 459: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Granules India

Granules India reported revenue growth of 15.5% YoY (+6.3% QoQ) to INR 84,985 Lakhs in Q1FY22 mainly on account of new launches and increase in market share of existing products. The company faced challenges in the quarter, such as shortage of raw materials, and lower utilization in capacities, especially in Paracetamol, and logistic disruption. Gross margin declined 300 bps QoQ and 530 bps YoY to 54.2% in Q1FY22. Consequently, EBITDA grew 9.7% YoY (-0.3% QoQ) to INR 20,143 Lakhs in Q1FY22; however, EBITDA margin contracted to 23.7% in Q1FY22 (-126 bps YoY / -157 bps QoQ). Net Profit grew 7.9% YoY; however, declined 5.8% QoQ to INR 12,020 Lakhs.

Outlook

We apply a P/E multiple of 16.4x on FY23E EPS of INR 28.0 (earlier 16x on FY23E EPS of INR 28.4) and maintain our target price of INR 459/ share as we believe the company is facing temporary headwinds due to supply constraints and can revive its financials from H2FY22 onwards. As the Target Price gives an upside of 23.4% over the CMP of INR 372, we reiterate our “BUY” rating on the shares of Granules India.

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