Granules India - Improved Business Trajectory Fueled By U.S. ANDA Approvals: Motilal Oswal
We expect a 17% earnings CAGR, a 12% sales CAGR in Intermediates/API segment, and a 10% CAGR in the formulation segment.
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Motilal Oswal Report
After a lull of abbreviated new drug application approvals in FY22/FY23, the pace of ANDA approvals has picked up for Granules India Ltd.
The company has already received three ANDA approvals in FY24 till date (versus four in FY23). It is optimistic about receiving additional approvals in the remaining period of FY24.
Also, the recent approvals include certain limited competition products and/or certain products, where Granules India has a competitive edge over its peers in the manufacturing value chain. Accordingly, we expect potential sales of $40 million from recent approvals on an annualised basis. This benefit may be adversely impacted to some extent due to IT security issue.
Considering a better outlook for U.S. ANDA business front and ongoing efforts to backward integrate core products such as Paracetamol/Metformin, we remain positive on Granules India.
We value Granules India at 13 times 12 months forward earnings to arrive at a price target of Rs 350. We reiterate our 'Buy' rating on the stock.
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