Sharekhan's research report on Granules India
We reiterate a Buy on Granules as the company is focusing on value-added products to increase its EBITDA margins to 22% plus from 19% in FY24. Granules is diversifying from being an API company to a formulations company by raising its formulation contribution from 65% to 70% in the next two years. Granules has recently received approval for Ibuprofen and Metoprolol Succiate PR tablets to be launched in value-added products. The company expects a leadership position in key molecules like Metformin and Paracetamol by setting up backward integration plants of key KSM DCDA and PAP.
Outlook
At CMP, the stock trades 20x/16x its FY2025E/FY2065E earnings and due to the rise in margin towards 22%, we ascribe a PE of 19x on FY26E EPS to arrive at a price target of Rs.600 (earlier Rs 515).
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