{"id":2717,"date":"2022-02-10T11:10:27","date_gmt":"2022-02-10T11:10:27","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=2717"},"modified":"2022-02-10T12:01:10","modified_gmt":"2022-02-10T12:01:10","slug":"growth-to-be-driven-by-entering-new-geographies-granules-india","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2022\/02\/10\/growth-to-be-driven-by-entering-new-geographies-granules-india\/","title":{"rendered":"Growth to be driven by entering new geographies\u2013 Granules India"},"content":{"rendered":"<p><img loading=\"lazy\" class=\"aligncenter wp-image-2695\" src=\"http:\/\/www.assetmultiplier.co.in\/blog\/wp-content\/uploads\/2022\/02\/Canva-Medicines-thermometer-scaled-e1644491204997-300x160.jpg\" alt=\"\" width=\"544\" height=\"290\" srcset=\"https:\/\/www.assetmultiplier.co.in\/blog\/wp-content\/uploads\/2022\/02\/Canva-Medicines-thermometer-scaled-e1644491204997-300x160.jpg 300w, https:\/\/www.assetmultiplier.co.in\/blog\/wp-content\/uploads\/2022\/02\/Canva-Medicines-thermometer-scaled-e1644491204997-1024x548.jpg 1024w, https:\/\/www.assetmultiplier.co.in\/blog\/wp-content\/uploads\/2022\/02\/Canva-Medicines-thermometer-scaled-e1644491204997-768x411.jpg 768w, https:\/\/www.assetmultiplier.co.in\/blog\/wp-content\/uploads\/2022\/02\/Canva-Medicines-thermometer-scaled-e1644491204997-1536x821.jpg 1536w, https:\/\/www.assetmultiplier.co.in\/blog\/wp-content\/uploads\/2022\/02\/Canva-Medicines-thermometer-scaled-e1644491204997-2048x1095.jpg 2048w\" sizes=\"(max-width: 544px) 100vw, 544px\" \/><\/p>\n<p><strong>Update\u00a0on the Indian Equity Market:<\/strong><\/p>\n<p>On Thursday, NIFTY ended at 17,606 (+0.8%) as it closed near the intraday high of 17,639. Among the sectoral indices, MEDIA (+1.7%), METAL (+1.2%), and FINANCIAL SERVICES (+1.2%) ended higher, whereas AUTO (-0.1%), and PSU BANK (-0.1%) were the losers. Among the stocks, ONGC (+3.6%), TATASTEEL (+2.0%), and INFY (+2.0%) led the gainers while MARUTI (-1.7%), IOC (-0.9%), and SHREECEM (-0.7%) led the losers.<\/p>\n<p><u>Granules released its 3QFY22 results on 8<sup>th<\/sup> February. Following aren the excerpts of an interview with Mr. Krishna Prasad Chigurupati, Chairman and MD of Granules India (GRANULES) with CNBC TV18 on 9<sup>th<\/sup> February 2022:<\/u><\/p>\n<ul>\n<li>The company has been operating at 60% of its production capacity for Paracetamol due to raw material shortages. It sells only APIs (active pharmaceutical ingredients) in India. All of its FDs (finished dosages) are sold in Europe and the US.<\/li>\n<li>The company\u2019s FD segment is more profitable than its other segments. The share of FDs as a part of revenues fell by 3-4%. This fall is due to inventory rationalisation by its customers in US. The company states this as one of the reasons that the margins couldn\u2019t improve. The management sees some uptick in FD sales going forward.<\/li>\n<li>Paracetamol\u2019s prices have been increased to pass on the raw material price increases to the customers.<\/li>\n<li>The freight cost is an important component for the company and the costs haven\u2019t improved in the last 6 months. The freight costs can go as high as 4-5% of the company\u2019s revenues.<\/li>\n<li>In FY23, the company will be crossing EBITDA margins of around 20-21%, but it is not confident of achieving the margins of 23%. The company expects to achieve a minimum of 12% growth in revenues by FY23 end.<\/li>\n<li>The company received 3 ANDA approvals in the US in 3QFY22. The company expects the market size for their aggregate to be around USD 400-500 mn. The company doesn\u2019t expect any growth in revenues from these products.<\/li>\n<li>The company plans to enter new geographical markets such as the Canadian, and South African markets. The company expects its new markets to account for 35-40% of its revenues, instead of 25-30% of total revenue as of now.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><strong>Asset Multiplier Comments<\/strong><\/p>\n<ul>\n<li>The raw material prices for the company\u2019s molecules (core and non-core) and freight costs are likely to stay high for the next 2 quarters. Therefore, we expect the EBITDA margin to be under pressure during this period.<\/li>\n<li>As the company\u2019s supplier for Paracetamol-related raw materials is about to start its plant by 15<sup>th<\/sup> Feb 2022, we expect the situation of raw material shortage to reduce from March.<\/li>\n<\/ul>\n<p><strong>Consensus Estimate<\/strong>: (Source: market screener website)<\/p>\n<ul>\n<li>The closing price of GRANULES was \u20b9 312\/- as of 10-February-2022. It traded at 18x\/13x\/11x the consensus earnings estimates of \u20b917\/24.2\/27.9 for FY22E\/FY23E\/FY24E respectively.<\/li>\n<li>The consensus target price of \u20b9 359 \/- implies a P\/E Multiple of 13x on FY24E EPS estimate of \u20b9 27.9\/-<\/li>\n<\/ul>\n<p>Disclaimer: &#8220;The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Update\u00a0on the Indian Equity Market: On Thursday, NIFTY ended at 17,606 (+0.8%) as it closed near the intraday high of 17,639. Among the sectoral indices, MEDIA (+1.7%), METAL (+1.2%), and FINANCIAL SERVICES (+1.2%) ended higher, whereas AUTO (-0.1%), and PSU BANK (-0.1%) were the losers. Among the stocks, ONGC (+3.6%), TATASTEEL (+2.0%), and INFY (+2.0%) [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[336,85],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2717"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=2717"}],"version-history":[{"count":4,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2717\/revisions"}],"predecessor-version":[{"id":2721,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2717\/revisions\/2721"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=2717"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=2717"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=2717"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}