Anand Rathi is bullish on Granules India has recommended buy rating on the stock with a target price of Rs 455 in its research report dated October 22, 2020.
Anand Rathi 's research report on Granules India
Driven by momentum in formulations and PFI, Granules had highest quarterly sales/margins/profit. Its Q2 FY21 sales grew 23% y/y to Rs8.6bn. Formulations grew 23% to Rs4.3bn, PFI sales were up 30% to Rs1.7bn and API sales grew 18% to Rs2.6bn. Product rationalisation and launches drove a 929bp surge in the gross margin (58%). Operating leverage and lower spending on R&D were prime drivers of the 935bp EBITDA-margin expansion to 30%. Adjusting for reversal of provisions and Covid-related costs, PAT grew 73% to Rs1.7bn.
Formulation launches and a foray into newer regions are likely to drive revenue/ PAT CAGRs of ~19%/~30% over FY20-23. We raise our target price to Rs455 (earlier Rs330) and maintain our Buy recommendation.
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