Webinar :Register now for Commodity Ki Paathshala webinar on ‘FPOs & Agriculture Marketing-The Beginning of a New Era’ on January 22, 4pm

Buy Granules India; target of Rs 340: Emkay Global Financial

Emkay Global Financial is bullish on Granules India has recommended buy rating on the stock with a target price of Rs 340 in its research report dated July 17, 2020.

July 21, 2020 / 01:43 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Emkay Global Financial's report on Granules India


GRAN’s Q1 print was solid, with revenue/EBITDA beating our estimates by 9%/18% − the best ever for the company. Gross margins rose 600bps qoq, helped by higher realizations, product rationalization and better mix. Current quarter GMs are largely sustainable, as per management, and should help drive a 30% increase in PAT in FY21. Over the last four quarters, GRAN’s gross margins have improved by ~900bps and we factor in 600bps improvement in GMs yoy in FY21. Balance sheet improvement continued, with leverage further down (net debt/EBITDA at 0.8x vs. 1.2x in FY20), though FCF generation was relatively weak (Rs373mn) due to higher WC. In line with management guidance, promoter pledge fell to ~8% from ~37%.



Outlook


We raise FY21/22/23 EPS by 13%/8%/10%, factoring in higher margins. With strong operating performance and a leaner balance sheet, we expect GRAN to re-rate. We retain Buy with a revised TP of Rs340. GRAN remains our top small cap pick and OW in EAP.





For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Jul 21, 2020 01:43 pm

stay updated

Get Daily News on your Browser
Sections