NSE ID :GRANULES
Granules
India is among the leading global manufacturer of high volume APIs
including Paracetamol, Ibuprofen, Metformin and Guaifenesin.
Additionally, Granules pioneered the concept of commercialising PFIs and
is the world's largest PFI facility.
The Indian
pharmaceutical industry grew at a CAGR of 14% in the five years leading
to FY12; Granules revenues grew at a 28% CAGR during the period. GIL
continued to strengthen its position in the rapidly growing market and
is aiming at achieving productivity gains, growth in volumes, sustained
margins and neutralising cost increases.
The company
has registered smart numbers for the quarter ending March 2012. The
revenue from operations has increased by 56.89% at Rs 188.09 crore for
quarter under review as compared to Rs 119.89 crore for the quarter
ended March 31, 2011 translating in operating profit of Rs.25.82 crore;
up by 46.37% y-oy. A comparatively tremendous net profit growth of
85.71% to Rs. 16.38 was reported for the Q4FY12 compared to Rs.8.82
crore of same quarter previous year. Growth in revenue and profits was
driven by higher growth in the finished dosage segment. EPS almost
doubled at Rs.8.15 y-o-y.
GIL offers
all three components of the pharmaceutical value chain which gives the
customers flexibility and choice. It manufactures PFIs (strategically
backward integrated through the in-house manufacture of APIs) to
finished dosages (tablets in bulk).
Valuation
With
efficient manufacturing value chain, increasing utilization, complete
vertical integration and capacity expansion GIL's revenue visibility
looks strong. We believe GIL is trading at an attractive valuation at
7.17x and 5.2x of FY13EPS of Rs.20.82 and FY14EPS of Rs.28.73. We
initiate a BUY on the stock with a target price of Rs.200 (appreciation
of about 34%) with the short to medium term investment horizon.
