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GRANULES - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | GRANULES | Market Cap | 13,406 Cr. | Current Price | 552 ₹ | High / Low | 627 ₹ |
| Stock P/E | 35.0 | Book Value | 146 ₹ | Dividend Yield | 0.27 % | ROCE | 10.9 % |
| ROE | 9.14 % | Face Value | 1.00 ₹ | DMA 50 | 575 ₹ | DMA 200 | 544 ₹ |
| Chg in FII Hold | -0.54 % | Chg in DII Hold | -0.44 % | PAT Qtr | 112 Cr. | PAT Prev Qtr | 121 Cr. |
| RSI | 41.0 | MACD | -6.69 | Volume | 3,39,725 | Avg Vol 1Wk | 9,90,645 |
| Low price | 412 ₹ | High price | 627 ₹ | PEG Ratio | -4.07 | Debt to equity | 0.29 |
| 52w Index | 65.2 % | Qtr Profit Var | 23.8 % | EPS | 16.3 ₹ | Industry PE | 29.0 |
📊 Core Financials
- Revenue & Profit Growth: Quarterly PAT declined from 121 Cr. to 112 Cr., though YoY profit variation stands at 23.8%, showing moderate growth.
- Margins: ROE at 9.14% and ROCE at 10.9% reflect modest profitability compared to industry peers.
- Debt Ratios: Debt-to-equity at 0.29 indicates manageable leverage.
- Cash Flows: Stable operating cash flows supported by pharmaceutical manufacturing operations.
- Return Metrics: EPS at 16.3 ₹ highlights consistent but moderate earnings power.
💹 Valuation Indicators
- P/E Ratio: 35.0, above industry PE of 29.0, suggesting mild overvaluation.
- P/B Ratio: ~3.8 (Current Price / Book Value), reasonable but not cheap.
- PEG Ratio: -4.07, distorted due to uneven growth expectations, signaling caution.
- Intrinsic Value: Current price (552 ₹) is slightly above fair value; upside potential depends on sustained earnings growth.
🏢 Business Model & Competitive Advantage
- Operates in pharmaceuticals with focus on APIs, formulations, and contract manufacturing.
- Competitive advantage lies in cost efficiency, global regulatory approvals, and diversified product portfolio.
- Resilient business model with export-driven revenues, though margins remain under pressure.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between 520 ₹ – 540 ₹ (near DMA 200).
- Long-Term Holding: Suitable for long-term investors seeking exposure to pharma exports, though profitability improvement is key.
Positive
- Debt-to-equity ratio at 0.29 shows manageable leverage.
- Consistent EPS and moderate profit growth.
- Strong presence in APIs and formulations with global reach.
Limitation
- ROE and ROCE are modest compared to industry leaders.
- P/E ratio above industry average indicates mild overvaluation.
- PEG ratio signals weak growth-adjusted valuation.
- Dividend yield at 0.27% is negligible.
Company Negative News
- Reduction in FII holdings (-0.54%) and DII holdings (-0.44%) show cautious institutional sentiment.
- Quarterly PAT decline from 121 Cr. to 112 Cr. reflects short-term pressure.
Company Positive News
- YoY profit growth of 23.8% shows resilience despite quarterly dip.
- Strong global presence and diversified product portfolio.
Industry
- Pharmaceutical sector remains resilient with steady demand for generics and APIs.
- Industry PE at 29.0 reflects moderate optimism and fair valuations.
Conclusion
- Granules India is a fundamentally stable pharma company with manageable debt and consistent earnings.
- Valuation is slightly premium, with modest profitability metrics.
- Best suited for long-term investors seeking steady exposure to pharma exports, with entry near support levels for better risk-reward.
I can also compare Granules India with peers like Aurobindo Pharma or Divi’s Labs to highlight its relative valuation and profitability positioning.