Anand Rathi recommended hold rating on Granules India with a target price of Rs 330 in its research report dated July 20, 2020.
Anand Rathi 's research report on Granules India
Granules India’ Q1 FY21 exceeded our expectations on all fronts and so far was one of its best quarters. Sales grew 24% y/y to `7.4bn driven by its formulations and PFI divisions. The former grew 35.2% to `3.9bn, the latter 42% to `1.4bn. API sales at `2.1bn came flat. Product rationalization and market-share gains in high-value products led to a 1,092bp surge in the gross margin (60%). The EBITDA margin though expanded 430bps to 25% due to product-recall costs (`97m) and higher employee cost. PAT was up 32.6% to `1.1bn. We expect ~21%/~27% revenue/PAT CAGRs over FY20-23.
We roll over valuations to FY23 and raise our target to `330 (earlier `312) while retaining our Buy call.
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