MOSL: GRANULES INDIA (Buy)-Margin expansion continues-Strong FY18 guidance
​Granules India: Margin expansion continues; Strong FY18 guidance
(GRAN IN, Mkt Cap USD0.4b, CMP INR146, TP INR200, 37% Upside, Buy)
- Sales declined 2.4% YoY to INR3.6b (5% above est.) in 4QFY17. EBITDA came in at INR785m (9% above est.), with the margin expanding 60bp YoY (+40bp QoQ) to 21.6% (est. of 20.8%). Notably, EBITDA margin has improved from a low of ~11% in FY13 to current levels, led by a change in product mix and capacity expansion. PAT rose 68.2% YoY (+17% QoQ) to INR457m (25.6% above est.). Associate income posted profit of INR94m v/s loss of INR25.2m in 4QFY16, mainly due to higher contribution from Omnichem JV.
- Strong FY18 guidance; US business commercialization expected from FY19: GRAN guided for strong revenue growth of ~20% and >20% PAT growth on ramp-up of new capacity, strong growth in formulations and Omnichem JV. Two complex filings were done from its Virginia facility (mkt. size of USD660m; 3-4 player market at the time of launch). Monetization of these products is expected in FY19 (target action date of Jan-18 for one product).
Granules India is engaged in the manufacture and supply of pharmaceutical formulation intermediates of various active pharmaceutical ingredients including Acetaminophen / Paracetomol, Guaifenesin and Pyrazinamide.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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