Dalal Street Investment Journal - July 09, 2019

12 DALAL STREET INVESTMENT JOURNAL I JULY 8 - 21, 2019 DSIJ. in^

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Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19Feb-19Mar-19Apr-19May-19Jun-19Jul-

Monthly Stock Market Returns

BSE Code: 532482

CMP: `99.85 FV: ` 1

BSE Volume: 38,

Date: 03 /07/

DS

G

ranules India Ltd. (GIL) is

a vertically integrated

pharmaceutical company.

It is engaged in the

manufacturing of active

pharmaceutical ingredients (APIs),

pharmaceutical formulation

intermediates (PFIs) and finished

dosages (FDs).

On the consolidated quarterly front, the

company reported a YoY growth of 21.

per cent in net sales to `613.32 crore in

Q4FY19 from `503.82 crore in Q4FY18.

EBITDA stood at `97.61 crore in

Q4FY19 as compared to `43.64 crore in

Q4FY18, marking an increase of 123.

per cent. EBITDA margin improved 725

bps YoY to 15.9 per cent in Q4FY19 from

8.7 per cent in Q4FY18. Net profit

exhibited a healthy growth of 132.01 per

cent as it rose to `45.04 crore in Q4FY

from `17.19 crore in Q4FY18. As a result,

EPS increased to `2.52 in Q4FY19 from

`0.81 in Q4FY18, marking a growth of

211.11 per cent.

The company posted a positive set of

numbers for the year ended March 31,

2019. The consolidated total income from

BOOST YOUR FINANCIAL HEALTH WITH GIL

Granules India Ltd.

material costs also helped in achieving

healthy revenue growth. EBITDA

margin expansion was curtailed to an

extent, despite sturdy operating leverage.

This is on account of higher spends on

R&D. The formulations segment

performed very well for yet another

quarter as it grew 59 per cent YoY.

Contrarily, the API segment, which grew

9.6 per cent YoY, was hampered by

delays in the US approvals. This

ultimately resulted in lower realisations

from expanded API capacities.

Nonetheless, the outlook for API sales is

optimistic in FY20 with an expected US

FDA approval in H2FY20. However, the

PFI segment will likely remain subdued

due to a shift in customer preferences to

formulations.

Moving forward, we can anticipate an

improvement in realisations on the back

of the US approvals for new API plants.

Margins are likely to improve due to a

ramp-up in export supplies. The

company’s net debt declined 14 per cent

since September 2018 and was reported

at `840 crore. Furthermore, its cash

conversion improved by 22 days to 118

days owing to lower receivables.

Presently, the promoter holding stands at

42.90 per cent, of which 43.40 per cent is

pledged. However, efforts are being

made to bring down the proportion of

pledged shares. Since the company is out

of its capex phase, its ability to generate

adequate free cash flows hereon will aid

in debt reduction. Furthermore, by

successfully passing the raw material

costs on to customers, GIL has good

earnings growth visibility in the

upcoming quarters. By virtue of these

factors, we urge our reader-investors to

BUY this stock.

operations rose 76.28 per cent YoY to

`2,279.20 crore in FY19 from `1,292.

crore in FY18. EBITDA climbed 84.

per cent YoY to `384.04 crore in FY

from `208.61 crore in FY18. Net profit

surged 106.43 per cent YoY to `187.

crore in FY19 from `90.91 crore in FY18.

Consequently, EPS increased 108.52 per

cent to 9.30 in FY19 from4.46 in FY18.

The strong performance is attributable to

healthy ramp-up in formulations and API

supplies. The new product launches,

expanded capacities and lowering raw

PRICED SCRIP

Total Income 613.32 631.78 580.87 453.24 503.

Other Income 1.88 5.88 4.18 14.74 9.

Operating Profit 99.49 119.18 104.71 87.34 53.

Interest 6.85 7.48 7.60 6.54 6.

Net Profit 45.04 58.23 47.23 37.16 17.

Equity 25.43 25.43 25.42 25.41 25.

Last Five Quarters (`/Cr)

Particulars Mar-19 Dec-18 Sep-18 Jun-18 Mar-

National Fert. 61.30 78.00 27.24 350.

Gufic BioSci. 78.70 95.10 20.84 288.

Jamna Auto Ind. 77.15 96.75 25.41 254.

Virinchi 88.00 110.00 25.00 225.

Amines & Plasti. 68.00 81.00 19.12 167.

Name of

Company

Absolute

Gains

(%)

Best of LAST ONE Year

Reco

Price

(`)

HERE IS WHY

New product launches

Higher realisations

Debt reduction

Exit/CMP

Price (`)

Annual

Returns

(%)

Shareholding Pattern

as of Mar. 2019

Promoters 42.

Public 57.

Others --

Total 100

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to enter these stocks considering the market sentiment right now.

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