Granules India
Date: 23/04/2019 Granules India CMP: Rs 116
Ready to deliver!
After three years of capacity expansion company is set to deliver. Management continues to be on set guidance. Expanded capacity comes on stream. Private labels products for USA market and facilities waiting for approval. Strong business and growth triggers in API division & FD Division.
Fundamental Update
Launch of private labels: Company successfully launched Metfomin & menthocarbonal tablets under private labels in USA, through wholly owned subsidiary, GPI. These launches will help in boosting margins going forward. 54% YoY top line growth; which was majorly led by paracetamol capacity catering to domestic market.
Approvals Awaited: Granules is waiting for following approvals -
1. 5000 TPA capacity of API Metformin ;
2. USFDA approval for export of new paracetamol capacity.
3. Company has filled for 24ANDA. Going forward management is confident to fill for 10-12products in current fiscal. Adding to this, company should get four approvals in next two quarters.
4. Omnichem JV (Crams) is waiting for five product approval. Management expects them to be approved in coming two quarters.
5. Oncology Formulation facility to start by Q4FY19. Initially, it will be catering to Indian market and gradually will start to launch in US & Europeans markets. This will help in margin expansion, as it will be a forward integrated product for granules India.
Recent approvals:
Recently on 18th April 2019 company received the approval for export of paracetamol(API) to USA. This approval could also lead to margin expansion as indicated by management.
Catalyst
• Sales growth from enhanced capacities.
• Products approvals for USA market.
• Raw material prices easing going forward.
• Change in sales mix towards higher Fixed Dosage and Private Labels should lead to margin expansion. Omnichem JV to contribute towards the CRAMS opportunity going forward (high margin).
• Management indication for 25% top-line and 20% bottom-line over the period of next two months will lead by facility and product approvals.
Some Basic Numbers -
Market Cap: 2,897cr
52wk Low: Rs72 52wk High: 124
Debt to Equity: .7
Cash: 200cr
M cap To Sales: 1.34
Sales Growth of 54% YoY: Incremental volumes from capex kicking in
Q3FY19 - 631
Q2FY19 - 580
Q3FY18 - 410
Operating Margins: Management focus for high margin products
Q3FY19 - 115cr
Q2FY19 - 113cr
Q3FY18 - 72cr
Management indicate to pledge free in two years–
Q3FY19 - 43.4
Q2FY19 - 60.35
Q3FY18 - 60.35
Profits: Came in flat due to annual maintenance of JV.
Q3FY19 - 60.4cr
Q2FY19 - 60.3cr
Q3FY18 -35cr
Gross Margins: Remained flattish because of higher raw material prices
Q3FY19 - 272
Q2FY19 - 263
Q3FY18 - 201
Ready to deliver!
After three years of capacity expansion company is set to deliver. Management continues to be on set guidance. Expanded capacity comes on stream. Private labels products for USA market and facilities waiting for approval. Strong business and growth triggers in API division & FD Division.
Fundamental Update
Launch of private labels: Company successfully launched Metfomin & menthocarbonal tablets under private labels in USA, through wholly owned subsidiary, GPI. These launches will help in boosting margins going forward. 54% YoY top line growth; which was majorly led by paracetamol capacity catering to domestic market.
Approvals Awaited: Granules is waiting for following approvals -
1. 5000 TPA capacity of API Metformin ;
2. USFDA approval for export of new paracetamol capacity.
3. Company has filled for 24ANDA. Going forward management is confident to fill for 10-12products in current fiscal. Adding to this, company should get four approvals in next two quarters.
4. Omnichem JV (Crams) is waiting for five product approval. Management expects them to be approved in coming two quarters.
5. Oncology Formulation facility to start by Q4FY19. Initially, it will be catering to Indian market and gradually will start to launch in US & Europeans markets. This will help in margin expansion, as it will be a forward integrated product for granules India.
Recent approvals:
Recently on 18th April 2019 company received the approval for export of paracetamol(API) to USA. This approval could also lead to margin expansion as indicated by management.
Catalyst
• Sales growth from enhanced capacities.
• Products approvals for USA market.
• Raw material prices easing going forward.
• Change in sales mix towards higher Fixed Dosage and Private Labels should lead to margin expansion. Omnichem JV to contribute towards the CRAMS opportunity going forward (high margin).
• Management indication for 25% top-line and 20% bottom-line over the period of next two months will lead by facility and product approvals.
Some Basic Numbers -
Market Cap: 2,897cr
52wk Low: Rs72 52wk High: 124
Debt to Equity: .7
Cash: 200cr
M cap To Sales: 1.34
Sales Growth of 54% YoY: Incremental volumes from capex kicking in
Q3FY19 - 631
Q2FY19 - 580
Q3FY18 - 410
Operating Margins: Management focus for high margin products
Q3FY19 - 115cr
Q2FY19 - 113cr
Q3FY18 - 72cr
Management indicate to pledge free in two years–
Q3FY19 - 43.4
Q2FY19 - 60.35
Q3FY18 - 60.35
Profits: Came in flat due to annual maintenance of JV.
Q3FY19 - 60.4cr
Q2FY19 - 60.3cr
Q3FY18 -35cr
Gross Margins: Remained flattish because of higher raw material prices
Q3FY19 - 272
Q2FY19 - 263
Q3FY18 - 201
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