We maintain BUY on Granules following yet another quarter of robust YoY growth driven by expanded capacities. EBITDA margin at 19.9% was 300bps above estimates, despite a 5% miss on revenue. Our TP is unchanged at Rs 170 (12x FY21E EPS).
Company has guided for 20% topline and 25% bottom-line growth for the next three years, primarily driven by ramp-up of utilization levels across the expanded capacities for various key molecules, and new launches in the US market. Overall margins are expected to improve on the back of better product mix.Near-term catalyst: Approval of filed ANDAs, any further reduction in pledge shares, and approval of API plants from key regulators.Key risk: Higher-than-expected pricing pressure, raw material cost inflation and adverse currency movement.We maintain a BUY with a target of Rs. 107