Daily Archives: June 15, 2020

Granules India Ltd

Pharmaceuticals
FV – Rs 1; 52wks H/L – 217.30/84.25; TTQ – 65 K; CMP – Rs 209 (As On June 15, 2020);                     

            Market Cap – Rs 5307 Crs

Consolidated Financials and Valuations (Amt in Rs Crs unless specified)

Granules India To Buyback Shares For Up To Rs. 2.5 Bln  (4.9% of paid up capital) at a tender price of RS. 200 per share. (https://www.bseindia.com/xml-data/corpfiling/AttachHis/67fdc713-7457-4915-90e6-83c0cb4fe8ed.pdf)

Slow growth in Q4 FY20 stemmed from the government ban on export of all forms of paracetamol. With the ban no longer in place, expects growth to pick up in Q1 FY21 as demand for paracetamol has risen amid the Covid-19 pandemic. Management is upbeat about the near-term performance and expects to beat its previous guidance of 20% topline growth in FY21.

Its dominance in key APIs (paracetamol, ibuprofen, metformin) would help Granules emerge a prime beneficiary as the Covid-19 outbreak has led to a surge in demand for such drugs. Granules is likely to retain strong position for the next couple of years as the ban is lifted by the government for supply of Paracetamol Drugs which would boost revenues.

Overview:

• Granules India Limited is one of the vertically integrated growing pharmaceutical manufacturing company in India today.
• Based out of Hyderabad, India, they are into manufacturing Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediaries (PFIs) and Finished Dosages (FDs).
• Granules is one of the most cost-effective and efficient manufacturers of APIs. It is also one of the global leaders in the manufacturing of Paracetamol, Metformin, Guaifenesin, and Methocarbamol.
• The company has 7 manufacturing plants out of which 6 are operational and 1 is under implementation.
• Its overseas markets are as crucial over 75% of the total turnover generating from export sales primarily in North America, Europe, and Latin American countries. Domestic market accounts for approximately 25% of the business.
• Granules’ has a presence in more than 60 countries; the Company caters to more than 250 clients across the globe. Its strong manufacturing capabilities coupled with customer centricity have helped to achieve this spread.

Q4 FY20 revenue break-up:

 Verticals-wise:

1. FD – 57%,
2. API – 30%,
3. PFI – 13%.

Geographically:

1. North America–58%,
2. Europe–14%,
3. India—17

Key Updates:

• Reduction of Net debt position by 33% from the year ended March 31, 2019. ROE and ROCE Improved to 19.9% and 20.5%, respectively, mainly due to the improved profits.
• Completed divestment of two non-strategic JVs; Biocause & Omnichem and received consideration of Rs 222 Crs out of which Rs 11 Crs was received in May 2020 although the divestment recorded in FY20.
• Received approvals for 12 this year; Total approvals stand at 29 products till date.
• Filed 45 ANDAs, 16 CEPs and 20 US DMFs as of March 31, 2020.
• Launched 5 products in the US as on March 31, 2020.
• Invested Rs40cr as part of maintenance CAPEX towards enhancing capacities at Gagillapur which will start yielding results from April 2020.
• Completed USFDA Audit for Gagillapur facilities in Hyderabad and Receive EIR for GPI in the US.
• The company has completed capitalisation of Unit-5 Vishakhapatnam and started from Q4 FY20 to depreciate the assets. Management said this unit would be the next growth engine for the company

Management:

• Krishna Prasad Chigurupati – Chairman & MD
• Sandeep Neogi – CFO

Shareholding Pattern:

37.62% of the Promoter holding is pledged.

Share Price Trend:

Share Price Snapshot :

Consolidated Financials:

Peer Comps: