Accumulate Granules India; target of Rs 443: KR Choksey

KR Choksey's research report on Granules India

Granules' Q4FY24 performance fell short of our expectations by 15.2%/10.6%/23.0%/36.2% on Revenue, Gross Profits, EBITDA and Net Income fronts, majorly due to far higher fall in APIs and PFI sales and stronger performance in FDFs than anticipated Hence, we cut down our EPS estimates by 16.0% and 8.0%, for FY25E/FY26E,respectively. As guided by the management, we believe APIs segment revenue will continue to fall in FY25E only to stabilize in FY26E.

Outlook

We bring down the valuation multiple to 16.0x (earlier 18.0x) on FY26E revised EPS of INR 27.7 (vs. earlier INR 30.7) to account for its ongoing weakness in APIs and cut down the target price to INR 443, implying an upside of 10.8% from the CMP. Accordingly, we downgrade our “BUY” rating on the shares of Granules India Ltd. to ACCUMULATE.

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Granules India - 18052024 - kr