Granules India Event Update Report By Emkay

* Granules acquired a 12.5% stake in USpharma, a privately held US generic company. The investment gives Granules access to USpharma’s future R&D pipeline with a first right of refusal and also potentially raise its stake further in future

* Granules had earlier in-licensed 4 ANDA’s awaiting approval in the US, from USpharma in June 2016. Granules expects to be a co-FTF for 3 products, though eventually we expect intense generic competition once other Para IV’s launch, post exclusivity period

* In our view, recent in-licensing deals (gZegerid-OTC agreement with Par, gGilenya, gEffient, gMultaq and gLatuda) will help strengthen Granules’ launch pipeline in the US and its eventual transition into a more ‘pure-play’ formulations player * Granules also setting stage to move to next level of growth with ongoing investments in developing a generic ANDA pipeline. We maintain our ACCUMULATE rating with target price of Rs 162/share, valuing Granules at 15x FY18E EPS of Rs10.8/share –