Last Updated : Nov 03, 2020 09:44 PM IST | Source: Moneycontrol.com

Buy Granules India; target of Rs 460: ICICI Direct

ICICI Direct is bullish on Granules India recommended buy rating on the stock with a target price of Rs 460 in its research report dated October 21, 2020.

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ICICI Direct's research report on Granules India


Q2 revenues grew 22.7% YoY to Rs 858 crore on the back of strong growth across segments. Formulations (FD) grew 22.4% YoY to Rs 430 crore, API grew 17.2% to Rs 255 crore and PFI grew 32.6% to Rs 173 crore. EBITDA margin improved 935 bps YoY to 29.9% due to change in product mix, higher operational efficiency. EBITDA grew 78.6% YoY to Rs 256 crore. PAT grew 70.8% YoY to Rs 164 crore. Delta vis-à-vis EBITDA was mainly due to higher tax rate.


Outlook


We like Granules’ clear vision to play on its strength of economies of scale and gradually expand into more complex products/forms to improve margins. Sustained margin expansion is likely to support FCF generation despite brownfield capex lined up till FY23E. We maintain BUY with a target price of Rs 460 (15x of FY23E EPS of Rs 30.6).


For all recommendations report, click here


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First Published on Nov 3, 2020 09:44 pm
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