Granules India shares gain 5%, hit record high on heavy volumes … We are positive on the stock
· Shares of Granules India hit a record high of Rs 417 after rising 5 per cent on the back of heavy volumes. The pharmaceutical company's stock surpassed its previous high of Rs 406.90, touched on September 29, 2020. The trading volumes on the counter more-than-doubled with a combined 2.23 million equity shares changing hands on the NSE and BSE, so far.
· In the July-September quarter (Q2FY21), the company’s revenue from operations grew by 22.7 per cent year-on-year (YoY) mainly on an account of new launches and increase in market share of existing products across the three verticals. Ebitda for the quarter grew 78.6 per cent YoY, with a +935 basis points (bps) margin expansion YoY on changing product mix and improved operational efficiencies arising out of higher capacity utilization.
· The management expects sales to Europe and LATAM over FY20-23 to expand 800bps and 400bps respectively to 28 per cent and 12 per cent. It plans to launch newer products and enter newer markets within these regions.
· Near-term growth is likely to be driven by the foray into MUPS (multi-unit pellet system) products, entry into newer markets and capacity addition in PFIs (pharmaceutical formulations intermediates) . Beyond which, its US pipeline and oncology products would drive growth.