Buy Granules India, target Rs 130: Motilal Oswal
Buy Granules India Ltd. at a price target of Rs 130.
By ETMarkets.com | Updated:
Motilal Oswal has a buy call on Granules India Ltd. with a target price of Rs 130.0 . The current market price of Granules India Ltd. is Rs 79.8 Time period given by analyst is a year when Granules India Ltd. price can reach defined target.
Granules India Ltd., incorporated in 1991, is a mid-cap company with a market cap of Rs 2109.39 crore.
Investment rationale by Motilal Oswal
We believe that the capex cycle for GRAN is nearing an end. Margin contraction in 4Q was a key negative surprise; however, management expects a recovery in coming quarters led by ramp-up of new capacity utilization, passing on of high RM cost and key launches in the US. We expect EBITDA and PAT to grow at >25% CAGR over FY18-20. We cut our target multiple to 15x (from 18x) and reduce FY19/20E EPS by ~16/21% due to slower margin recovery and slower ramp-up in US sales. Maintain Buy with TP of INR130 @ 15x FY20E (v/s INR175 @ 18x 1HFY20E).
Granules India Ltd., incorporated in 1991, is a mid-cap company with a market cap of Rs 2109.39 crore.
Investment rationale by Motilal Oswal
We believe that the capex cycle for GRAN is nearing an end. Margin contraction in 4Q was a key negative surprise; however, management expects a recovery in coming quarters led by ramp-up of new capacity utilization, passing on of high RM cost and key launches in the US. We expect EBITDA and PAT to grow at >25% CAGR over FY18-20. We cut our target multiple to 15x (from 18x) and reduce FY19/20E EPS by ~16/21% due to slower margin recovery and slower ramp-up in US sales. Maintain Buy with TP of INR130 @ 15x FY20E (v/s INR175 @ 18x 1HFY20E).
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