Granules India Q4 Results Review - Higher Finished Dosage Sales Drives Earnings: Dolat Capital

Dolat Capital Report

Granules India Ltd.'s Q4 FY24 results were above our estimates mainly on account of better than expected gross margin led by higher finished dosage sales and lower raw material costs, while sales were in-line.

Granules India expects to launch 14 new products in the US, Europe and other rest of world markets in FY25; Guided gross margin of ~55-58%. Paracetamol prices are expected to stabilize by FY26.

We upgrade our FY25E/FY26E Ebitda estimates by 2.4%/1.2% on assuming higher gross margin which will lead to higher Ebitda margin profile led by-

1. significant shift towards high-value products, with finished dosage segment's contribution rising to 70% (50% in FY23 and 65% in FY24) in the medium term and

2. decline in contribution from core molecules with high volume low value products with new product launches.

Maintain ‘Accumulate’ rating with target price of Rs 459 (earlier Rs 460) at 15 times FY26 price/earnings.

Key risks: Compliance issue on any facility, higher input cost.

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