For 2QFY15, Granules India (Granules) reported revenue growth of 15.6% yoy, to `3.08bn, due to strong performance across product
lines. EBITDA margin improved 445bps yoy, to 17%, on the back of increased capacity utilisation. Higher revenue and better EBITDA margin resulted in 46.1% yoy rise in adj. PAT, to `221m. Auctus’ pharma division contributed revenues of ₹225m and EBITDA of (-₹34mn) during the quarter. However, management expects Auctus subsidiary to break even on EBITDA level on full year basis for FY15. *Growth across segments. *Robust FD sales were driven by higher capacity and customer approvals. Finished dosages remained the largest contributor to revenue, at 50% utilisation. During the quarter, Granules commercialised the sale of Abacavir and expects to launch 4-5 APIs in H2FY15. Revenue growth in APIs is aided by de-bottlenecking of capacity. On standalone basis, FDs, APIs and PFIs contributed 40%, 32% and 28%, respectively. *Margin improvement to sustain. *Granules reported strong EBITDA margin improvement to 17% for 2QFY15 and expects to maintain the same in FY15. We believe that turnaround of loss-making Auctus subsidiary and start of revenue from Omnichem JV would provide upside to margins from FY16. *Our take. *We have a positive outlook on the stock, considering the robust revenues and improving margin. We believe the increasing emphasis on finished dosage would help maintain good growth momentum, going forward. Significant turnaround in business model towards a higher-value chain would improve profitability. The stock trades at attractive valuations of 16.2x FY15e and 12.6x FY16e earnings. We maintain Buy on the stock with target of `1,185, based on 14x FY17 earnings. *Risks. *Currency fluctuations and regulatory hurdles. -- -- NIFTYVIEWS.COM NOW A FREE OPEN SOURCE WEBSITE. http://www.niftyviews.com/ Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture.The administrator of www.Niftyviews.com just provide a platform for the authors to express their opinion and take no guarantee for the genuineness of the same."ANY member of this forum doesnt prepare or publish any research report; or ii. provide research report; or iii. make 'buy/sell/hold' recommendation; or iv. give price target; --- You received this message because you are subscribed to the Google Groups "Niftyviews.com" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
