Granules India

Granules India reported a 24.13% growth on Y-o-Y basis in revenue to Rs. 741.23 cr for the quarter ended June, 2020 mainly on account of growth in PFI (pharmaceutical formulation intermediates) and FD (finished dosage) segment. The company reported EBITDA of Rs. 183.59 cr with EBITDA margins improving 503 bps on Y-o-Y basis to 24.96% in Q1 FY21. Net profit for the quarter was at Rs. 111.45 cr resulting in a growth of 33.88% compared to same period last financial year. Granules India also declared an interim dividend of Rs. 0.25 per share for the quarter ended June, 2020.

Granules has started focusing on higher margin business like PFI and FD and has laid out a road map for capacity expansion to help aid future growth. As the company becomes one of the key players in manufacturing high volume molecules and shifts its focus to continuously improving its free cash flow generation we believe re-rating is on card. We opine to Buy on Dips as the company trades at fair valuation of 18.7x TTM earnings.