Geojit Financial Services has given a buy recommendation on Granules India with a target price of Rs 127.
Shares of Granules India closed at Rs 111 on 14 May, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
March quarter highlights:
Investment rationale:
"We expect consolidated revenue to grow at 20 per cent CAGR over CY19-21E led by more momentum in the US. We also increase our FY20E revenue and PAT estimates by 10 per cent and 18 per cent, respectively, on improving utilization rates," said the brokerage.
The brokerage expects Ebitda margin to remain in the range of 16-17 per cent for FY19-21E with higher efficiency in realization rates and higher sales from North America.
"Considering the lower valuations, management’s focus on improving debt profile and successful passing of raw material costs, we expect earnings to remain healthy in the long term and maintain the buy rating with a revised target price of Rs 127 at 10 times FY21E EPS," the brokerage said.