GRANULES - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.7
| Stock Code | GRANULES | Market Cap | 14,160 Cr. | Current Price | 583 ₹ | High / Low | 627 ₹ |
| Stock P/E | 36.9 | Book Value | 146 ₹ | Dividend Yield | 0.26 % | 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 | 52.3 | MACD | -5.17 | Volume | 21,19,490 | Avg Vol 1Wk | 8,45,118 |
| Low price | 412 ₹ | High price | 627 ₹ | PEG Ratio | -4.29 | Debt to equity | 0.29 |
| 52w Index | 79.5 % | Qtr Profit Var | 23.8 % | EPS | 16.3 ₹ | Industry PE | 29.1 |
📊 Analysis: Granules India trades at a P/E of 36.9, which is higher than the industry PE of 29.1, indicating premium valuation. ROCE (10.9%) and ROE (9.14%) are modest, reflecting average capital efficiency. EPS of 16.3 ₹ supports earnings, but the PEG ratio (-4.29) highlights weak growth visibility relative to valuation. Debt-to-equity at 0.29 is manageable, showing moderate leverage. Quarterly PAT declined slightly (112 Cr. vs 121 Cr.), though YoY profit variation remains positive at 23.8%. Technicals show consolidation near DMA 50 (575 ₹) and DMA 200 (544 ₹), with RSI at 52.3 suggesting neutral momentum.
💰 Entry Price Zone: Ideal accumulation range is 540 ₹ – 560 ₹, close to DMA 200 (544 ₹) for margin of safety. Current price (583 ₹) is slightly above this zone, so staggered buying is advisable.
📈 Exit / Holding Strategy: For existing holders, maintain positions with a medium-term horizon (2–3 years). Partial profit booking can be considered near 620 ₹ – 625 ₹ (recent highs). Long-term holding beyond 3 years requires improvement in ROE/ROCE and earnings growth. Dividend yield (0.26%) is negligible, so focus remains on capital appreciation.
✅ Positive
- Debt-to-equity ratio of 0.29, showing manageable leverage
- EPS of 16.3 ₹ supports valuation strength
- Quarterly profit variation positive at 23.8% YoY
- Strong trading volume above weekly average
⚠️ Limitation
- ROE (9.14%) and ROCE (10.9%) are modest
- PEG ratio (-4.29) indicates weak growth visibility
- P/E of 36.9 is premium compared to industry PE (29.1)
- Dividend yield of 0.26% offers negligible income
📉 Company Negative News
- Decline in FII holdings (-0.54%) and DII holdings (-0.44%)
- Quarterly PAT declined (112 Cr. vs 121 Cr.)
- MACD negative (-5.17), showing weak momentum
📈 Company Positive News
- YoY profit growth of 23.8%
- Stock supported by DMA 200 zone (544 ₹)
- Strong 52-week performance (79.5% index)
🏭 Industry
- Pharmaceutical sector enjoys long-term demand stability
- Industry PE at 29.1 highlights moderate valuation levels
- Sector rotation favors healthcare and pharma in defensive cycles
🔎 Conclusion
Granules India is a moderately valued pharma stock with stable fundamentals and manageable debt. While efficiency ratios are modest and growth visibility is weak, the company remains a fair candidate for medium-term holding. Ideal strategy: accumulate near 540–560 ₹, hold for 2–3 years, and book partial profits near highs (620–625 ₹). Long-term compounding potential depends on improvement in profitability and growth metrics.