Nirmal Bang has issued an “initiating coverage” research report claiming that Granules India is trading at attractive valuations and has huge upside of 35%
In the past five years from FY09-14, Granules India’s sales has grown at a CAGR of 23.2% with 67.8% PAT growth. For the next three years we expect the Granules India’s sales to grow by 28% and PAT by 44%. We expect the company’s EBITDA margins to improve 14.4% (consol in FY14) to 18% in FY17E, due to operational efficiency, turnaround of Auctus Pharma and change in business mix (higher contribution from formulations and Omnichem’s CRAMS). The stock is trading at attractive valuations 16.2x/11.8x/9.2x of our FY15E/FY16E/F17E expected earnings We are initiating coverage on Granules India Limited with a BUY rating for price target of 1,128 (13x on FY17E EPS), an upside of 36% from current levels.
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