Motilal Oswal is bullish on Granules India recommended buy rating on the stock with a target price of Rs 500 in its research report dated October 20, 2020.
Motilal Oswal 's research report on Granules India
Granules India (GRAN) continued to break its own record with another quarter of remarkable performance across revenue/EBITDA/PAT. This is largely on account of strong traction in formulations (FDs), intermediates (PFIs), and the addition of new customers in the API segment. We raise our EPS estimate by 21% for FY21/22E to factor in: (a) niche ANDA launches, (b) a superior product mix, c) geographic expansion, and d) better operating leverage. We also introduce FY23 estimates. We raise the PE multiple to 16x (from 15x earlier) to factor in product diversification and improved return ratios. Accordingly, we arrive at TP of INR500 on a 12M earnings basis. Reiterate Buy.
In addition to traction in core molecules (high volume / low value), GRAN is building high-value / relatively low-volume products and manufacturing capacities to drive superior growth going forward. We value GRAN at 16x 12M forward earnings to arrive at TP of INR500. Maintain Buy.
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