Despite Covid-19 impediments such as logistics disruption, raw material shortages and lower capacity utilisation, Q4 revenues grew 33.2% YoY to Rs. 799 crore driven by new launches and higher market share of existing products. FD grew 34% YoY to Rs. 461 crore due to increased volumes. API grew 9.1% to Rs. 194 crore amid new customer additions. PFI grew 85% to Rs. 144 crore on a low base tracking increased market penetration and new customer additions. EBITDA margins improved 861 bps YoY to 25.3% due to a change in product mix towards margin accretive PFI and FD segment along with higher operational efficiency. EBITDA more than doubled YoY to Rs. 202 crore. PAT grew 38.2% YoY to Rs. 128 crore. Delta vis-à-vis EBITDA was due to loss of MEIS incentives partially offset by a lower tax rate.
Valuation & Outlook
After achieving critical mass in commoditised but important products in last few quarters, Granules has been steadily expanding its reach into formulations with a vertically integrated model. This bodes well at a time when generic supply script globally is likely to be rewritten in the post-pandemic era that would be more conducive for vertically integrated players like Granules. Amid substantial price hike in paracetamol KSM, the management expects FY22 to be subdued but remains optimistic about FY23 scenario. Despite clear vision and an ability to play on its strength of economies of scale and gradual expansion, unpredictable margins scenario for FY22 is likely weigh for some time. We continue to monitor the direction on the margins. In the interim, we downgrade the stock from BUY to HOLD with a target price of Rs. 375 (earlier Rs. 460) at 14x FY23E EPS of Rs. 26.8.
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Shares of GRANULES INDIA LTD. was last trading in BSE at Rs.336.5 as compared to the previous close of Rs. 359.9. The total number of shares traded during the day was 796699 in over 20879 trades.
The stock hit an intraday high of Rs. 359 and intraday low of 333.4. The net turnover during the day was Rs. 271908047.