Granules India shares gain 5%, hit record high on heavy volumes

In Q2FY21, the company's Ebitda grew 78.6 per cent YoY, with a 935 basis points margin expansion YoY on changing product mix and improved operational efficiencies

Shares of Granules India hit a record high of Rs 417 after rising 5 per cent on the BSE on Tuesday on the back of heavy volumes. The pharmaceutical company's stock surpassed its previous high of Rs 406.90, touched on September 29, 2020.

At 10:44 am, the stock was trading 3 per cent higher at Rs 412 on the BSE, as compared to 0.74 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more-than-doubled with a combined 2.23 million equity shares changing hands on the NSE and BSE, so far.

In the July-September quarter (Q2FY21), the company’s revenue from operations grew by 22.7 per cent year-on-year (YoY) mainly on an account of new launches and increase in market share of existing products across the three verticals.

Ebitda (earnings before interest, taxes, depreciation, and amortization) for the quarter grew 78.6 per cent YoY, with a +935 basis points (bps) margin expansion YoY on changing product mix and improved operational efficiencies arising out of higher capacity utilization.

The management expects sales to Europe and LATAM over FY20-23 to expand 800bps and 400bps respectively to 28 per cent and 12 per cent. It plans to launch newer products and enter newer markets within these regions.

Near-term growth is likely to be driven by the foray into MUPS (multi-unit pellet system) products, entry into newer markets and capacity addition in PFIs (pharmaceutical formulations intermediates) . Beyond which, its US pipeline and oncology products would drive growth, analyst at Anand Rathi Share and Stock Brokers said in result update. The brokerage firm has ‘buy’ rating on the stock with target price of Rs 455 per share.