Equity

Granules India Ltd

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Granules India Ltd

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)

 
Equity Capital

Net worth
Debt
Total
Sales
PAT
BV
(Rs)

EPS (Rs)

P/E

Industry P/E

P/BV

Promoter’s
Stake
FY20 25.42 1844 794 2635 335 74 13.2 16 31.51 2.9 42.86
FY19 25.42 1529 933 2306 236 61 9.3 22.4 31.51 3.4 42.90

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 :

Year Open High Low Close
2010 90.2 116.55 85.3 94.5
2011 97.35 102.9 55 61.05
2012 62 234.5 60.05 157.7
2013 158.95 207.6 90.15 195.55
2014 195.5 940.55 189 827.35
2015 828.5 1,017.10 75.2 149.1
2016 148 151.65 91.45 107.95
2017 107.85 157 97.8 137.3
2018 137.65 150.5 71.75 89.65
2019 89.25 135.85 83.7 123.1
2020 124.15 217.3 114.5 184.75

 

Consolidated Financials:

Particulars 2015 2016 2017 2018 2019 2020
Sales  1084 1292 1357 1411 2306 2635
Net Profit 75 91 123 165 236 335
EPS (Rs.) 3.65 0.43 5.59 7.19 9.3 13.2
Share Capital  20 22 23 25 25 25
Networth 431 662 904 1304 1529 1844
Book Value (Rs.) 22 30 39 52 61 74
Debt 482 641 656 978 991 793
Fixed Assets  617 560 644 777 944 1,350
Investments 0 70 108 157 210 19

 

Peer Comps:

Name CMP Market Cap. Sales Net Profit Total Assets
(Rs. cr.)  
Sun Pharma 484 116176 32325 4187 56703
Dr Reddys Labs 4013 66682 17460 1970 17382
Divis Labs 2353 62465 5394 1377 7344
Cipla 642 51746 16695 1547 18874
Aurobindo Pharm 769 45047 22738 2845 22233
Lupin 948 42930 15143 -274 16867
Torrent Pharma 2474 41867 7780 1025 9219
Cadila Health 372 38083 12748 1852 18826
Alkem Lab 2345 28038 8344 1149 7972
GlaxoSmithKline 1400 23715 3224 93 1821
Ipca Labs 1618 20444 3773 444 3488
Pfizer 4131 18898 797 137 901
Alembic Pharma 893 16835 4606 801 4938
Ajanta Pharma 1436 12531 2588 468 2642
Natco Pharma 620 11282 2095 642 3877
Glenmark 395 11144 9705 925 9482
JB Chemicals 701 5414 1643 194 1509
Granules India 209 5310 2599 310 2637

 

 

 

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