BSE: 532482 | NSE: GRANULES | Pharmaceuticals & Drugs | Small Cap
Past 10 year's financial track record analysis by Moneyworks4me indicates that Granules India Ltd is a good quality company.
The key valuation ratios of Granules India Ltd's currently when compared to its past seem to suggest it is in the Overvalued zone.
The Price Trend analysis by MoneyWorks4Me indicates it is Semi Strong which suggest that the price of Granules India Ltd is likely to Rise-somewhat in the short term. However, please check the rating on Quality and Valuation before investing.
Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end.
| Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 | TTM | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROCE % ⓘ | 21.7% | 20.4% | 16.8% | 12.7% | 11.6% | 22.7% | 26.5% | 16.3% | 19.6% | 17.1% | - |
| Value Creation Index ⓘ | 0.6 | 0.5 | 0.2 | -0.1 | -0.2 | 0.6 | 1.0 | 0.2 | 0.5 | 0.3 | - |
Growth Parameters ⓘGrowth Parameters Colour Code Guide ⓘ | |||||||||||
| Sales ⓘ | 1,215 | 1,328 | 1,349 | 1,647 | 2,098 | 2,310 | 3,135 | 3,238 | 3,931 | 3,755 | 3,177 |
| Sales YoY Gr. | - | 9.3% | 1.6% | 22% | 27.4% | 10.1% | 35.7% | 3.3% | 21.4% | -4.5% | - |
| Adj EPS ⓘ | 4.7 | 5.6 | 6.4 | 5.3 | 6 | 12.7 | 22.6 | 15.9 | 20.9 | 18.1 | 13.3 |
| YoY Gr. | - | 19% | 14.7% | -17.1% | 13.4% | 111% | 77.9% | -29.5% | 31.1% | -13.1% | - |
| BVPS (₹) ⓘ | 20.8 | 29.3 | 38.6 | 50.1 | 55.7 | 70.9 | 86.9 | 101.6 | 111 | 127.8 | 136.2 |
| Adj Net Profit ⓘ | 95.6 | 121 | 146 | 135 | 153 | 322 | 559 | 394 | 505 | 439 | 323 |
| Cash Flow from Ops. ⓘ | 135 | 144 | 190 | 24 | 227 | 495 | 375 | 280 | 664 | 317 | - |
| Debt/CF from Ops. ⓘ | 3.1 | 4.5 | 3.5 | 40.8 | 4.4 | 1.8 | 2.2 | 3.7 | 1.4 | 3.3 | - |
CAGR Colour Code Guide ⓘ
| 9 Years | 5 Years | 3 Years | 1 Years | |||||
|---|---|---|---|---|---|---|---|---|
| Sales ⓘ | 13.4% | 12.3% | 6.2% | -4.5% | ||||
| Adj EPS ⓘ | 16.2% | 24.7% | -7.1% | -13.1% | ||||
| BVPSⓘ | 22.4% | 18.1% | 13.7% | 15.2% | ||||
| Share Price | 21.3% | 30.7% | 22.3% | 33.8% | ||||
Performance Ratio Colour Code Guide ⓘ
| Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 | TTM | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Return on Equity % ⓘ | 24.8 | 22.1 | 18.9 | 12.4 | 11.3 | 19.9 | 28.1 | 16.8 | 19.3 | 15.1 | 10.1 |
| Op. Profit Mgn % ⓘ | 17.4 | 20.3 | 22.3 | 17.8 | 15.9 | 21.4 | 27.8 | 20.2 | 21.5 | 21.5 | 20.1 |
| Net Profit Mgn % ⓘ | 7.9 | 9.1 | 10.8 | 8.2 | 7.3 | 14 | 17.8 | 12.2 | 12.8 | 11.7 | 10.2 |
| Debt to Equity ⓘ | 1 | 1 | 0.7 | 0.8 | 0.7 | 0.5 | 0.4 | 0.4 | 0.3 | 0.3 | - |
| Working Cap Days ⓘ | 110 | 168 | 241 | 278 | 237 | 195 | 169 | 211 | 198 | 228 | 152 |
| Cash Conv. Cycle ⓘ | 34 | 78 | 115 | 117 | 114 | 98 | 74 | 110 | 95 | 118 | 55 |
No data to display
Return on Equity has declined versus last 3 years average to 10.10%
Sales growth has been subdued in last 3 years 6.20%
Net Profit has been subdued in last 3 years -7.06%
Sales growth is not so good in last 4 quarters at -15.92%
| Standalone | Consolidated | |
|---|---|---|
| TTM EPS (₹) | 13.3 | 19.8 |
| TTM Sales (₹ Cr.) | 3,177 | 4,435 |
| BVPS (₹.) ⓘ | 136.2 | 146.2 |
| Reserves (₹ Cr.) ⓘ | 3,277 | 3,521 |
| P/BV ⓘ | 4.15 | 3.86 |
| PE ⓘ | 42.44 | 28.56 |
| From the Market | |
|---|---|
| 52 Week Low / High (₹) | 382.05 / 724.55 |
| All Time Low / High (₹) | 1.57 / 724.55 |
| Market Cap (₹ Cr.) | 13,686 |
| Equity (₹ Cr.) | 24.3 |
| Face Value (₹) | 1 |
| Industry PE ⓘ | 41.1 |
| Pledged * | 10.59 | 4.03 | 4.03 | 4.03 | 4.03 | 4.03 | 4.03 | 0.00 | 0.00 | 0.00 |
|
Particulars |
Q1FY24 |
YoY Trend |
Comments |
|
Revenue |
986 |
-3% |
Adversely impacted by cyber-attack (isolated event, security measures now improved) |
|
EBITDA |
137 |
-35% |
|
|
EBITDA Margin |
14% |
-688 bps |
Negative operating leverage, FTS* penalties as well as higher R&D spend impacted margins |
|
PAT |
48 |
-62% |
Higher interest costs/depreciation, lower other income impacted profitability |
Poor results due to isolated event, recovery expected. *Failure to supply
About the company
Granules India, established in 1991, manufactures API, intermediates and finished dosages primarily to regulated markets like US and Europe.
Sales have increased from Rs. 256 Cr in 2008 to Rs. 2,739 Cr in trailing twelve months Jun’20 which is almost 10x i.e. 21% CAGR. Companies like Laurus Labs, Shilpa Medicare, Divis Labs, Aarti drugs are similar to Granules India however each has scale in different APIs/Formulations.
Granules has nine manufacturing facilities predominantly in and around Hyderabad and Vizag and one is USA. All facilities have US FDA clearance. Presence in India helps pharma companies to have lower cost from lower investment needs into plant and machinery and cheaper human resources.
Granules derives bulk of its sales from API and Formulations. It has large contribution from regulated markets like US and Europe.
Recently the company is focusing on improving contribution from higher-margin finished dosages segment.
Recent growth came from market share gains and new drug introduction in formulations.
Financials
Granules India’s sales growth is 16% CAGR and 20% CAGR over last 5 years.
Its average ROCE is close to 17% in last 5 years despite of high investment base into new facilities.
Click here for complete financials of Granules India
Future Prospects
Granules India is expanding its base business by entering into new geographies like Europe, Canada, and South Africa. It also is adding new molecules to the base business and focusing on operational efficiencies and process innovation through R&D.
The company targets volume-based products and large scale manufacturing with competitive advantage & secured supply source for the customers. Scale gives the company to produce low cost ingredients and discourages other players from entering the same ingredient over medium term.
At R&D front, the company is developing controlled substances and niche/differentiated products in varied dosage forms. The plan is to have average 7- 8 ANDAs/Dossiers launches per year. The aim to use inhouse API manufacturing for keep formulations costs lower.
Positive triggers
Risks
Valuation
Granules predominantly an API company has large investment requirement. It has reasonable ROE with and growing sales.
Backed by capacity addition, the company is expected to report 30% growth in FY21 and ~15% thereafter.
At current price of Rs. 260/share, it trades at P/E ratio 19x on base of high margins, and Price to Sales of 2.5x including debt.
Based on our calculation the company trades at 17x FY22 EPS. We believe Granules is a good buy close to Rs. 220/share. You can add partially at current price and wait for market volatility to add more.
Granules India has medium term growth opportunity so can be added over next 6 months.
While the future potential is large, the execution, competition and regulation can lead to lower than expected performance and hence disappointment. If we find such risks that outweigh future prospects, we will recommend to exit Granules even at a small loss.
Note for Booster Stocks: These stocks are more volatile that large cap stocks. They are recommended to enhance your portfolio returns. Should any new information lead us to conclude that the recommended stock may not deliver as per expectations; we will recommend you to sell it. You are expected to act/exit even at a loss. You need to think portfolio and not individual stocks.
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 1,215 | 1,328 | 1,349 | 1,647 | 2,098 | 2,310 | 3,135 | 3,238 | 3,931 | 3,755 |
| Operating Expenses ⓘ | 1,004 | 1,058 | 1,054 | 1,353 | 1,766 | 1,816 | 2,274 | 2,594 | 3,096 | 2,954 |
| Manufacturing Costs | 82 | 99 | 122 | 152 | 173 | 195 | 233 | 291 | 294 | 364 |
| Material Costs | 707 | 730 | 659 | 903 | 1,250 | 1,222 | 1,510 | 1,758 | 2,161 | 1,907 |
| Employee Cost | 89 | 106 | 126 | 148 | 167 | 193 | 234 | 248 | 278 | 333 |
| Other Costs ⓘ | 125 | 123 | 148 | 150 | 175 | 206 | 296 | 298 | 362 | 350 |
| Operating Profit ⓘ | 211 | 270 | 296 | 294 | 332 | 494 | 861 | 644 | 835 | 801 |
| Operating Profit Margin (%) | 17.4% | 20.3% | 21.9% | 17.8% | 15.8% | 21.4% | 27.5% | 19.9% | 21.2% | 21.3% |
| Other Income ⓘ | 1 | 7 | 15 | 24 | 28 | 26 | 14 | 18 | 13 | 6 |
| Interest ⓘ | 31 | 37 | 32 | 33 | 28 | 27 | 24 | 16 | 39 | 72 |
| Depreciation ⓘ | 50 | 58 | 71 | 76 | 91 | 102 | 118 | 126 | 146 | 144 |
| Exceptional Items ⓘ | 0 | 0 | 0 | 0 | 0 | 161 | 0 | 0 | 0 | 0 |
| Profit Before Tax ⓘ | 132 | 181 | 207 | 208 | 242 | 553 | 733 | 520 | 664 | 591 |
| Tax ⓘ | 37 | 60 | 64 | 69 | 80 | 109 | 180 | 133 | 165 | 155 |
| Profit After Tax | 95 | 121 | 143 | 139 | 162 | 444 | 553 | 387 | 499 | 436 |
| PAT Margin (%) | 7.8% | 9.1% | 10.6% | 8.5% | 7.7% | 19.2% | 17.6% | 11.9% | 12.7% | 11.6% |
| Adjusted EPS (₹) | 4.7 | 5.6 | 6.3 | 5.5 | 6.4 | 17.5 | 22.3 | 15.6 | 20.6 | 18.0 |
| Dividend Payout Ratio (%) | 11% | 12% | 14% | 18% | 16% | 6% | 7% | 10% | 7% | 8% |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
Equity and Liabilities | ||||||||||
| Shareholders Fund | 425 | 636 | 882 | 1,273 | 1,416 | 1,803 | 2,152 | 2,518 | 2,686 | 3,097 |
| Share Capital ⓘ | 20 | 22 | 23 | 25 | 25 | 25 | 25 | 25 | 24 | 24 |
| Reserves ⓘ | 405 | 614 | 859 | 1,247 | 1,391 | 1,777 | 2,128 | 2,494 | 2,662 | 3,073 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Debt | 358 | 577 | 598 | 958 | 933 | 793 | 743 | 954 | 812 | 954 |
| Long Term Debt | 243 | 184 | 124 | 433 | 479 | 421 | 334 | 234 | 149 | 50 |
| Short Term Debt | 115 | 393 | 474 | 525 | 454 | 372 | 409 | 720 | 663 | 904 |
| Trade Payables | 183 | 177 | 210 | 261 | 277 | 323 | 508 | 607 | 744 | 655 |
| Others Liabilities ⓘ | 141 | 178 | 165 | 147 | 198 | 228 | 280 | 294 | 261 | 300 |
| Total Liabilities ⓘ | 1,107 | 1,568 | 1,855 | 2,639 | 2,824 | 3,146 | 3,683 | 4,373 | 4,503 | 5,006 |
Fixed Assets | ||||||||||
| Gross Block | 726 | 785 | 937 | 1,066 | 1,195 | 1,523 | 1,693 | 1,949 | 2,201 | 2,312 |
| Accumulated Depreciation | 204 | 261 | 332 | 405 | 495 | 596 | 708 | 778 | 871 | 989 |
| Net Fixed Assetsⓘ | 522 | 523 | 606 | 660 | 700 | 927 | 985 | 1,171 | 1,330 | 1,324 |
| CWIP ⓘ | 18 | 35 | 132 | 286 | 333 | 130 | 164 | 211 | 63 | 53 |
| Investmentsⓘ | 72 | 89 | 75 | 75 | 506 | 445 | 592 | 597 | 677 | 941 |
| Inventories | 179 | 210 | 238 | 227 | 314 | 344 | 462 | 591 | 593 | 579 |
| Trade Receivables | 194 | 444 | 468 | 693 | 704 | 627 | 1,014 | 1,210 | 1,372 | 1,633 |
| Cash Equivalents | 52 | 111 | 39 | 97 | 62 | 272 | 241 | 355 | 203 | 228 |
| Others Assetsⓘ | 68 | 155 | 297 | 600 | 204 | 401 | 225 | 238 | 265 | 248 |
| Total Assets ⓘ | 1,107 | 1,568 | 1,855 | 2,639 | 2,824 | 3,146 | 3,683 | 4,373 | 4,503 | 5,006 |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Cash Flow From Operating Activity ⓘ | 135 | 144 | 190 | 24 | 227 | 495 | 375 | 280 | 664 | 317 |
| PBT ⓘ | 132 | 181 | 207 | 208 | 242 | 553 | 733 | 520 | 664 | 591 |
| Adjustment ⓘ | 81 | 91 | 95 | 92 | 122 | -54 | 154 | 137 | 178 | 229 |
| Changes in Working Capital ⓘ | -47 | -80 | -53 | -223 | -50 | 115 | -326 | -234 | -1 | -347 |
| Tax Paid ⓘ | -31 | -48 | -59 | -53 | -87 | -120 | -186 | -143 | -177 | -157 |
| Cash Flow From Investing Activity ⓘ | -130 | -171 | -300 | -495 | -243 | -165 | -233 | -318 | -96 | -303 |
| Capex | -102 | -100 | -184 | -275 | -188 | -119 | -222 | -324 | -212 | -119 |
| Net Investments | 0 | 0 | -1 | 0 | 2 | 20 | -14 | 0 | 200 | 16 |
| Others ⓘ | -28 | -72 | -115 | -220 | -57 | -66 | 3 | 5 | -84 | -200 |
| Cash Flow From Financing Activityⓘ | 25 | 86 | 36 | 529 | -17 | -212 | -296 | 151 | -519 | 26 |
| Net Proceeds from Shares ⓘ | 1 | 106 | 83 | 293 | 1 | 0 | 4 | 3 | 3 | 3 |
| Net Proceeds from Borrowing ⓘ | 39 | -55 | -66 | 250 | 102 | -60 | -102 | -95 | -93 | -102 |
| Interest Paid ⓘ | -31 | -37 | -32 | -31 | -28 | -27 | -24 | -17 | -37 | -72 |
| Dividend Paid ⓘ | -8 | -23 | -22 | -29 | -31 | -31 | -25 | -37 | -19 | -36 |
| Others ⓘ | 24 | 96 | 73 | 46 | -62 | -95 | -150 | 298 | -374 | 233 |
| Net Cash Flow ⓘ | 30 | 58 | -73 | 58 | -33 | 118 | -154 | 113 | 48 | 40 |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Ratios | ||||||||||
| ROE (%) | 24.88 | 22.8 | 18.82 | 12.92 | 12.04 | 27.59 | 27.95 | 16.55 | 19.17 | 15.08 |
| ROCE (%) | 21.66 | 20.36 | 16.79 | 12.71 | 11.56 | 22.67 | 26.53 | 16.29 | 19.55 | 17.06 |
| Asset Turnover Ratio | 1.27 | 1.01 | 0.8 | 0.74 | 0.77 | 0.78 | 0.93 | 0.8 | 0.89 | 0.79 |
| PAT to CFO Conversion(x) | 1.42 | 1.19 | 1.33 | 0.17 | 1.4 | 1.11 | 0.68 | 0.72 | 1.33 | 0.73 | Working Capital Days |
| Receivable Days | 46 | 86 | 121 | 128 | 120 | 105 | 94 | 125 | 120 | 146 |
| Inventory Days | 44 | 53 | 59 | 51 | 47 | 52 | 46 | 59 | 55 | 57 |
| Payable Days | 80 | 90 | 107 | 95 | 78 | 90 | 100 | 116 | 114 | 134 |
Granules India Limited is a large-scale vertically integrated Company founded in 1991 manufacturing Active Pharmaceutical Ingredient (API), Pharmaceutical Formulation Intermediate (PFI) and Finished Dosage (FD). The Company over the years has created a strong presence in ‘the first line of defence’ products such as Paracetamol, Ibuprofen, Metformin, Methocarbamol, and Guaifenesin.
The company’s product-focused, vertically integrated business model has created a leadership position in several generic drugs. It has a strong presence in ‘first line of defence’ products, including Paracetamol, Ibuprofen, Guaifenesin and Metformin. It exports nearly 60% of its revenue to the US and Europe. Its key customers include some of the leading generic, as well as, branded pharmaceutical companies. Its integrated model for manufacturing APIs, PFIs and Finished Dosages enables it to provide products across the value chain and enhances its competitiveness. It has emerged into a knowledge driven, R&D focused, multi-product organization, with inherent strength in efficient manufacturing of high-volume pharmaceutical products.
Business area of the company
Granules India is one of the vertically integrated, high-growth pharmaceutical manufacturing company in India today. Based out of Hyderabad, India, it is into manufacturing Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediaries (PFIs) and Finished Dosages (FDs).
Products of the company
Milestones
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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