Granules India: Healthy Ride Ahead

Granules India: Healthy ride ahead

Granules India – the Hyderabad based drug maker – share price tapered off the 52-week high of Rs 134 last week.
The recovery was led by the expectations of improvement in revenue following the double dose of positive from India’s drug regulator allowing to hike prices and the US demand prospects revitalize the entire Pharmaceutical sector.

The drugmaker, with the current market capitalization of Rs 3,100 crore, has also benefited from the drug approval.
On Tuesday, Granules informed stock exchanges of receiving the US Food and Drug Administration’s nod for Acetaminophen tablet, a painkiller medicine.

Acetaminophen is also available in many over-the-counter combination medications and found in many prescription combination drugs.

The drug used for fever, headache and pain relief is worth $800 million market.
Granules is one of the leading drugmakers from India with the US regulatory approval for Acetaminophen. The company hopes to generate sizeable revenue from the export to US markets. This should reflect in improved margin and valuations.

However, analysts remain cautious on Granules valuations. They feel the drug makers’ current market price is above its intrinsic value of Rs 125 which is calculated after taking into consideration various parameters including the revenue growth, free cash – calculated on the basis of discounted cash flow.

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