Granules India Q3 Results Review - Inline; Backward Integration Projects On Track: Motilal Oswal

Motilal Oswal Report

Granules India Ltd. delivered an in-line performance in Q3 FY24. The inferior performance in the active pharma ingredient and intermediates segments was offset by superior traction in the formulation segment. A higher share of FDF boosted profitability on the YoY/QoQ basis. Granules India said backward integration projects for its core products are on track.

We reduce our earnings estimates by 2%/5%/5% for FY24/FY25/FY26, factoring-

1. inventory corrections implemented by customers in Latin America, and

2. increased competition in paracetamol in Europe.

We continue to value Granules India at 14 times 12 months forward earnings to arrive at a target price of Rs 475.

We remain positive on Granules India given-

1. the healthy abbreviated new drug application pipeline for the U.S. market,

2. expanding its presence in manufacturing value chain for its core molecules, and

3. a higher share of the FDF business.

Maintain 'Buy'.

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