- 31 Jul 2024
- ICICI Securities
GRANULES INDIA Q1FY25- REVENUES IN LINE WITH STRONG GROWTH; PROFITABILITY BETTER
GRANULES - 556 Change: 12.40 (2.28 %)News: Revenues grew ~20% YoY to ₹ 1176 crore, driven by strong US traction which grew ~45% to ₹ 602 crore. US now accounts for ~74% of overall sales. Europe on the other hand de-grew ~38% to ₹ 241 crore due to lower paracetamol sales. On segmental front, Formulations grew 66% YoY to ₹ 891 crore, driven by new products in the US and other geographies. APIs (APIs + PFIs), on the other hand declined ~35% to ₹ 289 crore led primarily by higher customer inventory and price erosion. Gross Profit which grew 23% YoY to Rs 706.2 crore (margins stood at 60%) driven by better product mix (higher formulations sales). Price erosions were more than offset by the reduction in price of key raw materials. EBITDA grew ~90% YoY to ₹ 259 crore and EBITDA margins stood at 22% (809 bps improvement). Besides lower base, the growth was driven by better product mix as reflected in GPM improvement (757 bps to 58.9%). PAT grew 181% YoY to ₹ 135 crore.
Views: Firm US sales and strengthening of margins were key takeaways from Q1 numbers. On API front, price erosion in Paracetamol and slower than expected inventory de-stocking at the customers’ end continue to weigh on performance. The company is now focusing more on Formulations (FD) to drive growth backed by volumes especially in the US and Europe. It plans to file 7- 8 products in the US every year. The company is also focusing on Oncology as a segment with dedicated API and formulations block at Vizag. It has already announced an aggressive Capex of ₹ 700 crore which includes manufacturing of Paracetamol and Metformin KSMs and intermediates via green route. We continue to monitor progress on the margins front as well as execution of the Capex.
Impact: Positive