Motilal Oswal's research report on Granules India
Granules India (GRAN) was issued a Form 483 with six observations for its Gagillapur site after a recent USFDA inspection. The observations are related to cleaning/maintenance, inadequate root-cause analysis, document management, procedures for in-process controls and air purification units. GRAN is expected to implement remediation measures to address the issues. We await the classification of inspection from USFDA to understand the sustainability of compliance with regulatory guidelines. Currently, there is no major product pending for approval and is built into estimates from this site. We await clarity on the impact of remediation measures on the ongoing business.
Outlook
We expect a 36% earnings CAGR over FY24-26. We value GRAN at 18x 12M forward earnings to arrive at a TP of INR680. We reiterate our BUY rating on the stock.
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