Granules India Ltd's Q4FY18 consolidated net profit declines 55.25% yoy to Rs20.44cr : Misses Estimates

The company’s consolidated revenue stood at Rs503.82cr, up 41.82% yoy and 22.66% qoq.

May 25, 2018 11:05 IST India Infoline Research Team

Granules India Ltd Q4FY18

Consolidated Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 503.82 41.8
EBITDA 43.63 [43.6]
EBITDA Margin (%) 8.7 [1,312]
Net Profit (adjusted) 20.44 [55.3]
***EBITDA margin change is bps


Reco. Price


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Granules India in Q4FY18 reported 41.8% yoy growth in revenue to Rs503.8cr. EBITDA in Q4FY18 declined by 43.6% yoy to Rs43.6cr vs. Rs77.4cr in Q4FY17. EBITDA margin in Q4FY18 was at 8.7% vs. 18% in Q3FY18 and 21.8% in Q4FY17. PAT declined by 55.3% yoy to Rs20.4cr in Q4FY18.
  • COGS grew by 98.3% yoy to Rs310cr in Q4FY18 vs. Rs156.2cr in Q4FY17. As % of sales, COGS was at 38.5% in Q4FY18 vs. 49.1% in Q3FY18 and 56% in Q4FY17.
  • Employee cost and other expenses grew by 17.1% and 26.4% yoy respectively.
  • This is the lowest EBITDA margin that the company has reported since Q2FY13.
  • Company has said that the environment remained challenging for the sector in FY18 and profitability remained weak due to certain macro and industry headwinds, which is reflected in material cost.
  • The company has also said that there is uncertainty on when these pressures will abate.
Concall highlights
  • The growth in Q4FY18 has been in all the segments, Ibuprofen’s contributed majorly which was followed by Guaifenesin, Paracetamol and Metformin.
  • Company has commercialized expanded capacities of Metformin and Paracetamol API in Bonthapally and the expanded capacity of PFI at Gagillapur.
  • The profitability was impacted due to the rise in the crude oil prices as well as rise in para aminophenol (due to regulatory environment in China) and acetic anhydride (due to the fire at one of the large supplier in US).
  • Acetic anhydride prices had shot up from Rs60 to Rs120 have come back to Rs95 and company expects it to go down further.
  • By end of FY18, company has made 20 ANDA filings with the USFDA, of this 10 were filed in FY18 and expects to maintain this rate in FY19E.
  • Completion of the oncology block is estimated to be completed in the Q2FY19E and will require additional ~Rs100cr capex, no fresh capex is likely in the near term and company is expecting capacities to start yielding returns.
  • Company has said that its JV, Granules Omnichem, had some off-take issues in FY18 but is targeted to achieve revenue CAGR of 25% over next five years. The shipments have also started from this JV.
  • Company has written off certain development cost (Rs16.7cr), R&D cost (Rs7.16cr) and obsolete inventory (Rs12cr) in Q4FY18.
  • The management has said that the they may increase the pledge little further.
  • Granules' products like paracetamol, API and PFI, have multi-year formula based priced contracts.
  • Company is able to pass on the prices to the customers, however there is a three-month lag, and hence, it has seen depletion of the gross margin, once prices stabilize, it will return to strong margin (18-19%) profile again in FY19E.
  • Launch of Metformin and Ibuprofen formulations on its own is expected to be growth driver going ahead.
  • Company has launched Methergine, which has size of $70mn in US.

Technical View:

Granules India Ltd is currently trading at Rs. 83.10, down by 6.55 points or 7.31% from its previous closing of Rs. 89.65 on the BSE.
The scrip opened at Rs. 90.55 and has touched a high and low of Rs. 91.40 and Rs. 81.70 respectively. So far 64,72,284 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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