Saturday, June 23, 2012




Like my repeated BUY recommendation on KAVERI SEED COMPANY in last year from a level of Rs.272/- onwards  ,this year it is GRANULES INDIA  for the fourth time even after an appreciation of about  40 % from the initial rate.I strongly feel this Hyderabad based Pharma company is still ignored by the market participants.This 650 Cr company ( Consolidated) is operating in API’s,PFI’s and Finished Dosages.Last year Granules posted a net profit of Rs.30 cr , a growth  of 43 % over previous year. Its turnover showing a CAGR of 28% in last five years which is exactly double of the average industry CAGR in these period.In FY 2011-12 , revenue growth in API division is 20% ,PFI 27 % and FD 83%.Currently company having 6 API products with a production capacity of 18000 TPA ,40 PFI products with 18000 TPA and 14 FD products with 18 Bn .What is really exciting is the upcoming increase in this production capacities where company’s API production will rise by 20% PFI by 200 % and FD capacity by 300%. Granules already made firm arrangements with MNC’s to sell these expanded capacity.Result of this expansion will start to reflect from the second quarter of this financial year itself.In addition to this ,Granules formed a 50:50 joint venture with Belgium based Ajinomoto Omnichem to produce niche low volume high price API’s .This new facility will be completed by the end of 2013 at Visakhapatnam and start commercial production from next FY.Company having an ambitious target of  Rs.5000 Cr turnover by 2017.Granules posted an EPS of Rs.14.90 and declared a dividend of  20 % for FY 2011-12.

Currently promoters holding about 41 % stake and FII's and institutions another 35 % .In recent months promoters are aggressively hiking their stake through open market purchases which is another important point to note.





Since company is exporting about 80% of its production ,depreciation of  currency  is also expected to help the company to improve its bottom line.A clean and transparent management with higher standards of corporate governance makes Granules India a preferred pick from the mid/small cap space.CMP is Rs.110/-

For old posting Click HERE

Dicl : I have vested interest in GIL


  1. Sir,

    Thanks for the recommendation. Your analysis is quite reliable. Sometimes, I wonder how you keep a track of so many companies and more importantly know the updates before the price actually increases.

    If you could share some insights on this, that would assist a lot.

  2. Dear Sir,

    Thanks for sharing all your hard work with others and giving us an insight into Company's which otherwise we would have never known.
    Could you please advise me one best share if I have to choose between SRF, Granules India and Diamond Power and Infrastructure.

    Thanks in Advance.


    1. Not tracking SRF
      For Diamond Infra , just read the below link before taking a decision:

  3. Hello!

    Can you advise which is a better bet from a medium to long term perspective - Vadilal or Tasty Bites?


  4. Dear Valuepick - Current PE is at 7.8x. Pharma companies of this size trade at around 11-12x. Do you see Granules reaching that target? Also what about the 60% pledge by the promoters? Is the pledge for supplanting the capex company is undergoing?

    1. Promoters started to release pledge

      See the below link

  5. Hello sir... jayshree tea has come down a bit and has stagnated at Rs80/- is it still a buy now, could you pls reply.


  6. Sir, granules hit LC today - a ny news? Can we buy at these levels sir?

  7. Dear Kumar.

    Your statement is not correct.Today Granules low is around Rs.123 where its lower circuit is Rs.104/- In stock market all investors are not alike.Some will trade for peanuts and happy with that and some others have patience and belief in business and they are investing to grow with the growth of company.There is nothing unusual in a 5% fall after many days up move.Let weaker hands sell and move out .I have faith in this company and a buyer even at this level with a long term view.

  8. Thank you sir for your insight! Will accumulate. Appreciate your wise response

  9. Thanks for your insight. On the subject of Pharma, what are your views on Wockhardt. Basically its the 800lb gorilla of the Pharma Industry.

    1. Wockhardt - I think it is very late at this price .

  10. Sir, Read this on MC
    "This is only the start of a long journey.Currently the contribution of of API,PFI and Formulation to total turnover is almost equal (approx.30 % each) .But the percentage of PFI and Formulation will sharply improve from next quarter on commissioning of new facilities.Considering the higher NP margins of this sectors ,on 2000 Cr sales company will post 150 Cr net profit by next year which will translate an EPS of Rs.75/- .Based on current P/E of the company and the industry average p/E , price should be Rs.650/- . Leave it and take half of it , it should be at least Rs.325/0 which is almost three times from current price.Decide yourself ...."

    Do you agree with this? Looking forward to your valuable insight

  11. Dear Kumar

    Expecting bright future for Granules .No comments on figures.

  12. Dear Value Pick...

    My question is why Wockhardt cant command a valuation equal to CIPLA or LUPIN at 24 PE..?? I see wockhardt doing around 5000 cr sales and an estimated profit of around 750 cr in worst case. which translates into an upside of almost 90% in a year.... Also market likes companies that are growing and turning around ..even pays much higher PE for some days expecting more positives...Please paste your suggestions..



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