Granules India – Treading the right path: Emkay Research Report

– Granules offers three components of the pharma value-chain manufacturing APIs, PFIs and FDs and is seeing strong transformation to high profitable business mix

– Recent Auctus acquisition and Omnichem JV providing the much-needed product diversification and a fillip to create a high-end regulated markets exporter with stronger margins

– Improving return ratios, cashflows and profitability to re-rate stock valuations. The stock not pricing in improvement in business quality and growth

– Inexpensive and compelling valuations; the stock trades at PER of 8.8x FY16E. We initiate coverage with a Buy and a target price of Rs773 at 12x FY16E EPS of Rs64.4

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