Saturday, October 13, 2012

Granules India - Fastest Growing Pharma Company




Granules India Limited is an Indian pharmaceutical company, founded by C. Krishna Prasad. Granules is a large-scale, fully backward integrated formulation manufacturer which partners with market leaders to provide products throughout the pharmaceutical value chain. The Company manufactures Finished Dosages (FDs), Pharmaceutical Formulation Intermediates (PFIs) and Active Pharmaceutical Ingredients (APIs) which are distributed in over 50 countries.

Granules manufactures several off-patent drugs, including Paracetamol, Ibuprofen, Metformin and Guaifenesin, on a large-scale for customers in the regulated and semi-regulated markets.

There has been an aggressive promoter buying seen in the counter in past 6 months or so. Also, the founder of the company, C Krishna Prasad has released nearly 14 Lakhs Shares from Pledge in past 3 months, which is a great, great confidence booster for investors.

Stock Price Estimates:

This is one stock where I feel that even when the stock has risen from 55-60 levels in Dec 2011 to 230-235 in Sept 2012, it is still not late to enter the script as I expect the price to touch 250-290 very soon, mostly within next 3 quarters. 
Further I expect the stock to go on increasing with time, till it reaches 4 digits.
According to the information that I have from company's management, it is expected that Granules India will be a 5000 Cr Revenue company by 2017 from 500 Cr Revenue company today.
As per the report declared by the company, they expect Q2 and Q3 of Fiscal Year (FY) 2013 to be the breakout quarters for their company. Lets invest and hope for the best.


Disclosure
I have invested heavily in this company and have a good number of shares at an avg price of 139. But, still, I expect everyone to do their own research and consulting before investing in the company.






99 comments:

  1. Finally you gave your precious research on this stock ;).I have also invested a good chunk in this stock as per your advice and I got good returns also and again as per your advice I have not sold it yet and also promoters aggression on this stock strongly tells that we should hold this.So hope for the best :) and cheers :)

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  2. Yes, actually, I was a bit worried as the stock has already moved from 55 to 230, that is appreciation of 418%, in just 9 months. I thought that stock might show some correction.
    But the way it has traded in last 30 days, it seems it has got a good support around 185.
    Now, as the results are coming out soon, we can expect the stock to make new highs, if the results are upto the expectations, otherwise we might have to wait for 1 more quarter.
    Lets hope for the best!!!

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  3. Excellent results posted by the company....Net profit up by a whopping 228% compared to Q2 FY 2012..which is great...

    But more than the results, the capacity expansion news was awaited which came out as expected...

    The company expects a better second-half performance as its expansion projects are nearing completion. The company is spending Rs 115 crore to increase the capacity of its PFI (pharmaceutical formulations intermediaries) production.

    “Both these projects will be completed in the current quarter and we hope to see them contribute to our sales in the second half of the fiscal,” Bhaskar Krishna, CEO, told media persons here.

    Granules India’s joint venture with Belgium firm OmniChem to set up a manufacturing facility in Visakhapatnam is on track and is expected to be ready in the second quarter of 2013-14. “We expect to achieve financial closure for the JV project next month. The facility will start commercial production by 2015 after it gets all the required regulatory clearances. Till then, the production will be used for captive use,” said V.V.S Murthy, CFO.

    Source: The Hindu Business Line

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  4. Look at the details of expansion and joint venture with OmniChem here:
    http://www.businessstandard.com/india/news/granules-omnichems-vizag-plant-to-be-ready-by-q22013/192900/on

    ReplyDelete
  5. The stock is definitely a buy at current market price....but its always advisable to buy your stocks in parts, so that you can always avg it in case the stock goes down for short term...
    The suggested can also go against you, if the stock starts rising....but this technique is used to minimize the risk level..

    ReplyDelete
  6. The promoters aren't leaving a single oppurtunity to buy this stock..
    According to latest report, Chairman and MD of Granules bought shares worth 9 Lakh rupees from open market on 30th Nov at an avg price of about 180 Rs..

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  7. C Krishna Prasad, the Managing Director of Granules India has released another 14.1 Lakhs shares from pledge, which is another great news...
    Its always good to see the company, clearing all its debts..
    Very hopeful for a target of 250-275 within next 1-2 quarters..
    All the best!!!!!

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  8. Thanks kunal for posting latest information about Granules.

    ReplyDelete
  9. Thanks kunal for ur good work. Please give ur views on Accelya kale consultants, M & M Financial services,
    Sarla performance,KPIT,speciality rest, and any good bank on attractive valuations

    ReplyDelete
  10. Hi Peush,

    Kale Consultants was an excellent buy when it was 150-160...was tracking the stock at that time...
    Now that it has appreciated so much, will have to be careful with our investments...Its making new highs everyday...
    In IT, I like Infinite Computer Solutions which can give you good returns in long term...

    Sarla Performance looks good, healthy promoter holding (still buying), good dividend and nice growth in Sales...

    Speciality Rest might test your patience before going up...would advice to do more research on it before investing....

    Cant comment on KPIT, M&M Fin as they are highly liquid stocks....I am not a fan of higher Mid-caps and large caps...So, you need to consult with someone else for these 2...

    ReplyDelete
  11. Was searching for some good stocks for long term investment, and came across 2 good stocks..
    1) Vikas WSP
    2) Gulshan Polycols

    Already invested in Gulshan Polycols, and planning to invest in Vikas WSP soon...
    Check out these stocks..

    ReplyDelete
  12. Thanks kunal for your inputs.

    I also seek your opinion on following small caps for 1-5 yr holding from decent management

    Already up on results - Dhanuka agri,Acrysil after bonus, Tilak Nagar, Nesco,Fairfield atlas - Most of these stocks did not offer good returns in last 1.5 yrs despite good workings but are zooming since last 3-4 months. How long will this diwali last.....I am only talking from a long term point, however if these go down in a fall 30-40%, it hurts.

    Are you tracking Metkore also. Good bottomline, slowing topline but falling after stock split.

    ReplyDelete
  13. Very good observation of Low valuations and high appreciation potential...Thanks a ton

    ReplyDelete
  14. Hi Peush,

    Frankly speaking, out of all the stocks you mentioned, I am tracking only Dhanuka Agritech, which I feel is good for long term with 100% or more than 100% dividend paid by the company, strong promoter holding of almost 75%.
    FYI, dont get too much impressed by Q2 results compared to other quarters, because, their main business comes during rainy season due to which everytime the Q2 numbers are good.....
    The thing that impresses me is the topline growth of almost 20-30% every year....

    Will update you if I get any info on the other stocks mentioned...

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  15. Promoter buying seen in Gulshan Polycols, thats another good news after decent results....
    Lets hope for the best!!!!
    Trying to add more at these levels...

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  16. Hi Kunal,

    Please do some research on Nectar Lifescience which is available around 20-21, a pharma scrip with Rs.2000 crs turnover in sight and decent profits !!!

    ReplyDelete
  17. P.S. I would like to explore it from buy-out/take-over aspects also keeping in view shareholding pattern. Also compare it vis-a-vis Granules India. Just for your ready reference, in March 2010 NSR(New Silk Routes) of Rajat Gupta fame have taken an equity @ Rs.36 and even a GDR issue at the same rate.

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  18. Nectar Lifesciences elevates to the rank of 365 in the list of India's top companies

    ReplyDelete
  19. Nectar Lifesciences elevates to the rank of 365 in the list of India's top companies

    ReplyDelete
  20. Hi Totalview,

    I think this stock might give you good returns based on performance of the company and further expectations, but I think it might not prove to be a multibagger (5-10x) because:

    1) The stock is very very liquid (Extremely dilute stock with face value of Rs 1). Volumes on the counter are around 3 lakhs per day without any news or any significant upward or downward movements.

    2) It has got big revenues, close to 1500 Crs, which is almost equivalent to those of Glenmark or other huge pharma companies. Hence its a huge company. Such companies can give you good returns but they may not become multi-baggers.

    3) In my view, 44% promoter holding means chances of take-over might be difficult. Still, not sure on that part.

    Conclusion: The stock looks very strong fundamentally, but its liquidity is very high. Hence it can give good returns, but in my opinion, the stock might not prove to be a multi-bagger. (Thats my opinion) :)

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  21. Being the first joint exhibition between ELCOMA and Messe Frankfurt, Light India was organized from 5th - 8th October 2012 at Pragati Maidan, New Delhi, with strong support from the Ministry of Power, Bureau of Energy Efficiency (BEE), Builders Association of India, Council of Architecture, Central Public Works Department (CPWD) and Global Lighting Association (GLA).

    With an emphasis on green and energy efficient lighting technology, the exhibition played host to 187 exhibitors from China, Germany, India, Italy and the USA. The show was spread across six halls covering an area of 13,800 sqm, and attracted 16,486 visitors which exceeded exhibitors’ expectation in terms of visitor quality.

    Most companies exhibiting in Light India came with an objective to either announce their entry into a particular segment or to launch their new product line. Photoquip, a leader in the photography lighting sector, picked Light India as a platform to announce their entry into the Indian LED industry by launching the brand “Corvi”, Mr Vimal Soni, Director of Corvi, said: “We met traders and corporates that were keen on our patented LED products. Our participation at Light India has enabled us to build business contacts and we have also made some lucrative business deals already.”

    Source: http://www.electricalportal.co.uk/electrical_article12851.html
    (Found posted by Amit Arora in his blog)

    ReplyDelete
  22. Buying Vikas WSP and Photoquip at the moment...

    Dont think Gulshan Polyols will move away so quickly, hence taking som time investing into that..

    Interested in Photoquip just on the basis of above post....dont know by when it will get reflected in numbers posted by Photoquip.... but I love taking such risks....

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  23. Excellent news for investors of Ajanta Pharma:
    http://www.business-standard.com/india/news/ajanta-pharma-to-start-workdahej-plant-early-next-year/494750/

    But again, as per reports, the units will be operational from 2014-15.....
    Hence, we need to wait, to enjoy the fruits from this company.

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  24. still it is good news for ajanta pharma investors

    ReplyDelete
  25. Another Great News From Thangamayil:

    Thangamayil Jewellery Ltd has informed BSE that the Company is opening its 24th Branch at Kovilpatti, Tuticorin Dist, Tamilnadu on December 12, .2012 (Wednseday) between 09.00 a.m. and 10.00 a,m. admeasuring 2043 sqft and 25th branch at Udumalpet, Tiruppur Dist., Tamilnadu on December 14, 2012 (Friday) between 12.05 p.m. and 1.00 p.m. admeasurlng 1668 sq.ft.

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  26. Whats your view on vikas wsp at current market price. I am holding 200@ 58 Rs..Please let me know in detail...

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  27. Right now, increasing demand of guar gum tells me that you should hold the stock for atleast 1-2 years, to achieve great returns...

    Promoters of the company has also done lots of buying around 70 levels, because they are well aware of the demand situation in comings days..

    Just saw this interesting link posted by Amit Arora:
    http://www.readwhere.com/read/73235/Sandhya-Border-Times/Sandhya-Border-Times#page/1/2

    ReplyDelete
  28. http://www.thehindubusinessline.com/companies/contract-manufacturing-granules-bets-on-partner-omnichems-strength/article4188561.ece

    ReplyDelete
  29. Money Matters is now approaching its fair value close to 180-200 as for the current situation...
    All the investors who followed me on moneycontrol and bought it around 80 levels a year back have got their money doubled....
    But I strongly feel that before profit booking, we should wait for the Q3 results, as I believe that company's got enough potential to go up further...
    We can take a call once results are out.....Of course, partial profit booking can be done as we have already got 100% returns...

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  30. I have sold 25% shares at 165 levels...

    This was just to ensure that, as I already have huge quantity invested in Money Matters, I could use the 25% of the amount to invest in some other scripts...

    After all, we should never forget that Money Matters started its downfall for 750-800 levels.... ;-)

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  31. Hi Kunal,
    Granules quoting below 160 ! Is it a good enytry point? Basically I feel that they are a commodity manufacturing outfit like Nectar Life and mainly in CRAMS segment. Don't you feel that the valuation is getting corrected and still the stock is quoting at a trailing PE of around 10-11 as compared to many other CRAMS outfits quoting at a much lower PE of 5 to 7 e.g.Nectar Life ! I hope you understand as to why I am comparing it with Granules as both are in API and CRAMS segment and I have some investments in Nectar Life.

    ReplyDelete
  32. Hi Totalview,

    As I said earlier also, I am not saying there's any problem with Nectar, it is good company and can give you good returns...
    My only point is that, it cant become a multi-bagger like Granules for which I frankly expect a 4-digit price some day..

    The reason is simple. Nectar is already a huge company and is very well placed in market, whereas Granules has to reach that level, and ofcourse, they are looking well on track...

    The way promoters have bought in last 1 year, the way they have released all their shares from pledge, the way capacity expansion news has come in, from 9000 tonnes to 18000 tonnes, the way they have received awards for India's Most Admired Company in Exports & India's Most Admired Company in Bulk Drugs..... All of these news suggests that there is something great going to happen soon...

    Link (Award): www.indiaprwire.com/pressrelease/medical/20120924131888.htm

    ReplyDelete
  33. To add to that, Promoters were not hesitant to buy even above 200 levels....

    In this downfall, promoters bought at 215-217 levels, then 190-198 levels and then 180 levels.... Now I think they are almost done with 5% acquisition for the year...

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  34. Hi Kunal, have taken an entry on your recommendation :)

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  35. On 13th December, 2012, The PCB (Pollution Control Board) reviewed 50 pharma and chemical plants in the Indian state of Andhra Pradesh and is reportedly planning tough actions against the worst offenders. In this list, Granules India was also involved.

    I think that may be the reason why stock is not picking up.
    May be once this issue gets resolved and we have a good set of quarterly numbers after expansion, we can see a big jump in share price.

    Again, its about patience of investors like all our multi-baggers so far...

    Lets hope for the best..

    Link: http://www.fiercepharmamanufacturing.com/story/ax-hangs-over-polluting-indian-production-plants/2012-12-13

    ReplyDelete
  36. Got this mail from Photoquip's management, which seems to be a good news:

    Regarding your queries please note as below:

    1) The management has very ambitious plans for CORVI. The project is on schedule and we have already started despatches of 2 products.

    2) CORVI products will form an important part of the Q4 figures of Photoquip.


    Hope the same is to your satisfaction.

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  37. We have seen some worrying notices from Granules India Management in past few days...
    1) Resignation of some Director
    2) Selling of shares by Dr. A Bhaskar Krishna from open market.

    Bhaskar Krishna, bought 50000 shares near 20th Oct 2012, at an avg price around 196 Rs per share.
    Now sudden sale of shares by him surprises us...

    Let me remind you that Bhaskar Krishna is not the promoter of the company, so his selling would not affect the promoters holding, but it can be a bad sign..

    If the selling was for some of his personal use, than that should be fine, else we will have to revisit the company's prospects...Lets see if some further selling happens from promoters side..

    The best we can do is to wait for the results on 24th Jan....Till then, would advise everyone, not to buy much shares...

    In such cases, its always better to enter late in the counter and make slightly less profits, then to go for losses...

    All the best!!!!

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  38. Photoquip's promoters back in action..
    Bought shares from open market after almost 9 months...
    May be they could now smell the profits generated frm CORVI....
    Lets hope for the best!!

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  39. After 2-3 worrying news from Granules, we finally saw a good rally today, and I saw a further positive news for Granules investors through HDFC Securities..
    According to them, Granules India now might start an uptrend.

    Link: http://www.valuenotes.com/Investment-Strategy/Granules-India-Buy-at-CMP-160/180035/12540301.00/C

    Not sure, if fundamental stocks move technically as suggested by charts....

    We can just wait and watch......

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  40. Simply Awesome!!!!!!

    I can smell a great future ahead...
    http://www.youtube.com/watch?v=9E0jHoIINWU

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  41. I dont know how I missed this video earlier.....certainly would have bought many more shares of photoquip by now....

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  42. My million dollar question is "will they be able to commercialise the designs and put it to profitable proposition" and billion dollar question "when will they share the growth with minority shareholders" !

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  43. To answer your million dollar question, I would say, lets wait for Q4, 2013 results...
    And for your billion dollar question, I have got no idea, but it seems they are looking to collect as many shares as possible from open market, and then start paying dividends..
    There, we can only hope for the best!!!!!

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  44. Hey Kunal

    Just chanced upon your blog, interestingly while searching for " bhaskar granules selling shares" :-). I've lost some sleep too thinking about it. Some info that I have :

    1. Resignation of Director:
    I am copying the company's response to a fellow boarded on Moneycontrol :
    Mr. Joby was appointed as a Board Member through one of our investors, ISP. As part of their regular practice, ISP rotates board members every few years. If you look at historic records, you can see that before Mr. Joby, we had 2 other board members who served terms approx the same length as Mr. Joby.
    ISP will soon name their representative to the board again."
    So that's settled I guess.

    2. Bhaskar Krishna selling shares:

    This continues to worry me and he's sold another 9K in the last couple of days. I called the Company Secy and she informed me that he is selling purely in his personal capacity and has nothing to do with their expansion plans or company performance which could impact Q3 or subsequent results.

    I am keeping my fingers crossed and will wait for Jan 24.

    ReplyDelete
  45. I also mailed them last month after the PCB threat and when here's the conversation that talks about expansion plans:

    Me:
    "hank you for the quick response Vijay. We investors have quite a lot at stake invested in Granules and would like to see this issue resolved soon.

    One last question:

    Since it is only Jeedimetla only production of Metformin,Guaifenesin,Methocarbamol and some Multiple PFI ( 1200 TPA out of the total of 18000 TPA)may be impacted.

    In your Press release announcing the last quarterly results, it was mentioned that ' Granules finished its PFI expansion and now has a capacity of 18,000 tonnes which is the largest in the Pharmaceutical Industry. The Company commercialized the new capacity in October and will scale up production throughout the third quarter. In addition Granules is on track to finish its FD expansion during the 3rd Q"

    My understanding from your response is that both of the above remain on track and un affected by the PCB threat. Could you please confirm
    "

    Granules' Response:
    "Hello Kumar

    We finished the PFI expansion in the third quarter and are scaling up the capacity in stages. In addition, we are collecting validation data so we can share it with the necessary regulatory bodies along with customers. Since this module has a different layout and machinery than our other modules, we will continue to optimize the manufacturing process through the rest of fiscal year. The FD expansion has also met its timeline and like the PFI expansion, we will collect validation data for our customers and will ramp it up throughout the rest of the fiscal year. They will be fully operational for the start of FY14. The expansion was done at our Gagillapur Facility and is not affected by the PCB issues that are being mentioned in the paper.

    Thank you

    Vijay."


    So what do you read from all this? Curious to hear your thoughts.

    ReplyDelete
  46. The 1st point you mentioned is the reply that I got from Granules Management...

    Here is the complete reply:

    Thank you for the e-mail. Mr. Joby was appointed as a Board Member through one of our investors, ISP. As part of their regular practice, ISP rotates board members every few years. If you look at historical records, you can see that before Mr. Joby, we had two other board members who served terms approximately the same length as Mr. Joby. ISP will soon name their representative to the Board again.



    As for Dr. Bhaskar, he did sell some shares but he still holds more than 45,000 shares in the Company, which is a substantial amount.



    Finally, as follow-up to your earlier enquiry, I’m passing along an article from Business Standard (http://www.business-standard.com/india/news/ap-bulk-drug-ind-seeks-nod-for-expansion/498034/)

    ReplyDelete
  47. The issue raised by PCB is almost nullified now, as the governing body has asked to lift the ban on pharma companies...

    Now, on selling of shares by Bhaskar Krishna, we, for now has to agree with what their management is saying.
    If he is doing it for some personal reasons, then its good..
    He might have bought the shares to get good returns immediately. He bought 50000 shares together on 25th Oct around 190 levels, but as the shares kept on falling, he might have had to sell them...for some personal reasons, may be...

    But in any case, I am thinking of waiting till 24th Jan, as you said, as I am, not only expecting a good results, but some important announcements also from the management..

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  48. Actually the last report from HDFC Securities that I posted here earlier, boosted my confidence in the company...

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  49. Yep, 24th will be the D Day at least for the investors. I am holding long term, with the same 4 digit conviction as you! Thanks for your response!

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  50. Another blockbuster numbers posted by Money Matters...The official pdf is not out yet, but here is the highlights of the results:

    Money Matters Financial Services Limited has announced its financial results for the quarter ended December 31, 2012.

    The company has posted net profit of Rs.211.660 million for the quarter ended December 31, 2012 as compared to Rs.122.154 million for the quarter ended December 31, 2011, representing an increase of 73.27%.

    Total income was at Rs.5662.904 million for the quarter ended December 31, 2012 where as the same was at Rs.1497.707 million for the quarter ended December 31, 2011, representing an increase of 278.10%.

    The company has reported an EPS of Rs.5.93 for the quarter ended December 31, 2012 as compared to Rs.3.42 for the quarter ended December 31, 2011.

    The company has posted net profit of Rs.543.159 million for the 9 months period ended December 31, 2012 as compared to Rs.273.043 million for the 9 months period ended September 30, 2011, representing an increase of 98.93%.

    Total income was at Rs.10912.792 million for the 9 months period ended September 30, 2012 where as the same was at Rs.3916.887 million for the 9 months ended December 31, 2011, representing an increase of 178.61%.

    The company has reported an EPS of Rs.15.21 for the 9 months period ended December 31, 2012 as compared to Rs.7.64 for the 9 months period ended December 31, 2011.

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  51. Revenues up by 278% YOY.....its unbelievable....
    Dont know where the stock is heading...
    It has almost appreciated by 100% in last quater...
    But is that enough for the results posted?? :P

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  52. It seems it will take some time for Photoquip to generate profits from Corvi ! They have participated in various Trade Fairs and have incurred quite a good sum on these participations with hardly any revenue. December and March 2013 quarters' performance may be quite challenging and under stress !

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  53. I would probably wait for Q4 results as the management is expecting some growth in revenues on account of higher sales of CORVI products, as per the mail that I received from them....
    Till then, lets wait and watch..
    In the meanwhile, we havent seen further promoters buying since last 10 days.....

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  54. I shall advise not to be adversely-influenced by March 2013 working !!! They are spending a lot in promotion of the Corvi. Next FY they are showcasing their product in US Lightfair and cost of hiring a space itself for three days is around Rs.65 lacs ! They are experienced in this business and by March 2013 they would complete showcasing their products in nine Metros of India. I have seen their products and with proper planning it can be a success. However, we will have to keep our fingers crossed atleast for a year. By Amit's opinion it's likely to blast before 2020 :) But may be in four figures !

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  55. Congratulations to all the investors of Ajanta Pharma...
    Your patience paid you...
    Stock hit upper circuit immediately after blasting Q3 numbers....
    Stock now trading at 491...
    I will come up with detailed review of results tonight..
    Just FYI, the revenues are up by 40% YOY and Net Profit up by 75%...

    ReplyDelete
  56. Thank you so much kunal! Really i earned good amount of profit in less time . This credit goes to you only. Coz it is ur suggestion to invest in ajanta pharma. Jai ho kunal.

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  57. Ajanta Pharma has posted an excellent set of numbers...

    Revenues shot up to 229 Crs from 164 Crs last year and 186 Crs last quarter...
    Net Profit has rose to 32 Crs from 18.51 Crs last year and 21.88 Crs last quarter..
    Hence, the EPS has rose to 13.91, which is great going, year on year as well as quater on quater...

    ReplyDelete
  58. Ajanta Pharma recently received marketing authorization in UK for Sildenafil Tablets 50mg & 100mg. Company expects to launch the same in UK when it goes off patent in June 13.

    Company has also filed 2 more ANDAs with US FDA, taking the tally of ANDAs pending approval to 9.

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  59. I have seen comments from SP Tulsian, which says that one should not enter Ajanta Pharma at these levels now...
    May be that is because, he suggested this stock in Feb 12, when it was trading around 200 Rs (adjusted) and he gave a target of 250 Rs...
    But the stock has even doubled from that level now...

    Even considering current market price, the stock is trading at a P/E multiple of 13, which is fairly low compared to Pharma Industry average which is around 28...
    That means the stock is still fairly cheap...

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  60. Here I would still say that short term investors can take their own decisions, but myself being a long term investor, I would not quit this stock now, even if it goes down 50 Rs from here....

    I still maintain the starting target of 1000 Rs per share within next 2 years...

    But obviously, I am not running the stock market, so, be careful, and take your own wise decision...

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  61. These were the announcements made by Ajanta Pharma today in press conference along with the results.....

    There was plenty more of such information....
    You can check in the result pdf on www.bseindia.com or www.moneycontrol.com

    ReplyDelete
  62. Ajanta Pharma now showing violent movements....

    The best scenario would be if Ajanta settles around 500 levels....trades around 500 for some days, and then start a new journey upwards...

    Today, I m sure, plenty of intraday orders would be placed, due to which stock might show some rough movements throughout the day...

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  63. Net Profit for Granules has fallen, but the management has given reasons behind the fall.....
    Most of the their issues have been resolved, and we can expect great numbers from Q1, 2013-14....

    Might have to wait till then....

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  64. Dear Kunal

    Can you dig deeply into the Q3 figures of Granules as many of us are invested heavily into this company expecting good results in second half of FY 2012-13 itself.

    But the management disappointed us all and all the negative hearsey like share selling by top executives, pollution control, etc.. have taken toll on the company.

    We now need to ascertain whether the capital investment made for expansion of capacity would definately happen and the market will be stable for these products at the time of commercialisation.

    Arun Kumar
    Hyderabad

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  65. Dear Kunal

    Please do a detailed analysis on Granules for the benefit of all of us.

    You have been helping all of us in these days.


    ReplyDelete
  66. Sir, I will answer your questions in parts...

    First thing, you said that selling of shares by top management is a worry...
    Let me tell you that, Dr. A Bhaskar Krishna is not the part of promoter group....
    His selling does not affect the promoter holding..

    Also, let me remind you that C Nageswara Rao, the chairman of the company, bought shares at 217, 196, 180 levels...
    If he knew something bad is coming, he also would have sold all his shares....

    Dr A Bhaskar Krishna, is normal shareholder like you and me. Of course, if he is selling, thats not a good news, but we need to find out the reason why he sold.
    If it was because of poor numbers, then I think Nageswara Rao would also had sold...

    So, I dont think, we have any problem there....

    Thats strictly my opinion (It may vary from person to person)

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  67. This comment has been removed by the author.

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  68. For your query related to PCB....please refer this link:

    http://www.business-standard.com/india/news/ap-bulk-drug-ind-seeks-nod-for-expansion/498034/

    And morever, the management also confirmed that it will affect only Jeedimetla Facility which forms about 1200 tonnes capacity out of their total 18000 tonnes capacity...
    But in any case the problem seems to be solved....

    ReplyDelete
  69. Third thing, about this quarter results, I would like to say that, this time they posted the highest ever quarterly sales till now i.e. 195 Crs....

    Profits went down and sales were slightly lower than expectations, as there were plenty of reasons behind it, as mentioned in the Press Release pdf...

    I think the stock, went down, because the expectations set for the stock were very very high, and it wasnt able to meet that expectation...

    As per the press release, we will have to wait till Q1 FY13-14 results, that is 6 months from now, to see the full contribution from capacity expansion by the company...

    ReplyDelete
  70. I dont understand the short term movements much, as they are technical details...but yes, I heard somewhere, that 140 was a very good support level which is broken, and hence it can go down further....
    But I am not sure, how much these fundamental picks follow technical details....

    I have answered all the questions related to fundamentals of the company...

    Each one is advised to take their own decisions....

    ReplyDelete
  71. I will keep everyone informed about any further news from the company..

    Just FYI, I am not planning to sell my shares of Granules before Q1 FY13-14, as we will have to revisit all the details then...Infact, I am planning to add few more shares if it goes down further....

    But one can take their own calls based on their understanding....

    ReplyDelete
  72. Thanks for your kind words, Arun Kumar..

    Till now, out of 5 stocks mentioned in various post, 2 are appreciated.....(Ajanta and Thanga)
    I hope very soon, all the picks mentioned starts performing and all of you get rewarded...

    But yes, as we are investing in small caps, one thing that we need to have the most is Patience :)

    ReplyDelete
  73. Delivery on Ajanta Pharma today was around 7%...

    This is bound to happen, when stock hits upper circuit on previous day....

    I hope the stock settles around 500, then we can expect a next upmove...

    Till then, we will have to wait and watch...

    ReplyDelete
  74. More here: http://t.in.com/8v8s

    ReplyDelete
  75. Please repost!!!!!!!!!!

    Dont paste it as link............ just copy the link from opened internet browser and paste it over here....

    ReplyDelete
  76. Detailed Analysis on Ajanta Pharma by Angel Broking:

    - Sales grew by 39.7% YoY mainly on account of volume growth and aided by weakening rupee

    - Exports contribution for the quarter was higher at 67% (as against 65% in Q2FY13) due to higher contribution from WHO’s anti-malarial program.

    - EBITDA margin rose significantly to 26.1% led by operating leverage and lower cost of materials

    - PAT grew by 76% yoy and 49% qoq. PAT margins rose by 293 bps yoy and 246 bps qoq.

    - For full year management is guiding for 30% growth with around 22% EBITDA margins

    - The company has recently received marketing authorization in UK for Sildenafil tablets (better known as Viagra) for 50mg and 100 mg. Company expects to launch the same in UK post patent expiration in June 2013.

    - Company has filed two more ANDAs with USFDA taking the total number of pending approval to nine and total filings to 11. Company intends to file ~ three more ANDAs in Q4FY13 meeting it annual target of 5-6 ANDAs per year.


    Valuation & Recommendation:

    The stock has surpassed our target price of Rs 441. Considering the continuous outperformance, healthy outlook and recent re-rating we have given a higher multiple of 12x to the stock. Based on our FY14E EPS of Rs 55.7 and multiple of 12x, target price comes to Rs 669, a potential upside of 24%. Hence, we recommend to ‘BUY on Decline’.

    ReplyDelete
  77. Source: Business Standard

    Hyderabad-based Granules India Limited reported a 27.3 per cent drop in net profit to Rs 5.80 crore for the quarter ended December 2012 as compared with Rs 7.98 crore in the corresponding quarter last year.

    The dent in profitability was attributed to increased overhead costs on account of capacity expansion that was largely left unutilised in the last couple of quarters and lower revenue growth.

    Total income from operations grew 5.1 per cent to Rs 195.22 crore in the quarter under review from Rs 185.72 crore in the year ago period.

    “We were supposed to double our capacity in granulation but some teething problems delayed the process by two quarters as we deployed new technologies. This and similar constraints led to lower revenue growth,” Harsha Chigurupati, executive director of Granules India, said.

    The company expects to achieve the capacity targets and subsequent increase in the share of high margin formulations business from the beginning of the next financial year. It plans to increase the formulations to 45-50 per cent of the total business in the next couple of years from the present 30 per cent level, according to Chigurupati.

    Active pharmaceutical ingredients (APIs) or bulk drugs accounting for 40 per cent of the pharmaceutical formulation ingredients (PFIs) contributed around 25 per cent to the revenues in the December quarter. VVS Murthy, chief financial officer said the company expected to close the current financial year with a 25 per cent growth in revenues while net profit could remain flat.

    ReplyDelete
  78. I am not sure on whats happening in Ajanta Pharma off late....

    May be there are plenty of intraday traders involved who are manupulating the price at their will now...

    Short and medium term traders, take their decisions consulting some chart specialist...

    But long term investors like me, who are ready to stay in the script for 2 years, can remain invested... (Its ur decision finally...)

    I am still not changing my target of 1000 in next 2 years.....as I feel if it does that, it would be a proportionate growth compared to growth in their business...

    ReplyDelete
  79. Dear Kunal.....Thanks for helping,After going through your blog...will appreciate if you kindly help me think right...Actually even I am heavily invested in Granules approx rate of purchase is around 185 what do you think is it normal for delay of expansion as it was told to be completed in Dec quarter and now they say april .....I think it is very normal to have teething problems in Business....and also as far as medicine is concerned where you have to be very very careful cause one wrong batch and you are finished.
    Do you think there are any red flags or the expansion plans are fake and they are covering the delay by saying its a new technology, how much you grade the authenticity of promoters
    what should be our strategy can wait long time but do you think by April things will fall in place....have to also consider opportunity cost.....

    ReplyDelete
  80. Read this,

    Source: Business World Magazine (Latest Addition, 28th Jan)

    Granules India:
    The company has had a dream run over the past five years, having grown at a CAGR of 27.5 per cent. It recorded revenues of Rs 475 crore in FY12. Contract manufacturing pharmaceutical formulation intermediates (PFIs), or ready-to-make capsules, helped it create a niche for itself in the global markets. Today, Granules, which has one of the world’s largest tablet manufacturing capacity at 12 million tonnes per annum, supplies APIs, finished drugs and PFIs to over 300 customers in 60 countries. However, it focuses on 5-6 common off-patent drugs such as paracetamol, ibuprofen, metformin (diabetes drug) and guaifenesin (for cough and chest congestion).

    “Our revenues are balanced from APIs, PFIs and finished drugs. More capacities are required to meet the demand,” says Bhaskar Krishna Arumugam, CEO of Granules India.

    Harsha Chigurupati, executive director of Granules India, says the company may add a maximum of 3-4 APIs in near future, but will not try to focus on developing a big basket of products. “We don’t want to be one among the many; instead, we prefer to be the top-quality manufacturer in the products we make.”

    Source for complete article:
    http://www.businessworld.in/en/storypage/-/bw/the-rise-of-api-barons/750773.37494/page/0

    ReplyDelete
  81. Sir, as far as the appreciations that I have seen for Granules India, I dont think the expansion plans are fake...

    If you talk about promoters, they were not hesitant even for buying around 215-217 levels....They have bought heavily in the range of 175-217...and none of them have sold the shares yet....
    If we talk about Dr. A Bhaskar Krishna, I would not comment on that, as he is not the part of promoters group...

    Link for Award:
    http://smartinvestor.business-standard.com/company/ban-12632-2012_09_25-2012_09_25.htm

    ReplyDelete
  82. Being invested in Granules, at a price much above the current market price, it would be advisable to wait till results of Q1-FY14, that is just 6 months away....
    This is atleast what I am going to do...
    Everyone can take their own decisions...

    I would also not advice anyone, to average out at this price...
    Its better if we wait for the stock to start uptrend, and then enter... that way, we might make a lesser profit, but atleast we will be safe...

    ReplyDelete
  83. Good to see, Thangamayil Jewellery hitting upper circuit just 2-3 days before the results...
    Lets see whats in store for us tomorrow...
    May be we will have another blockbuster results from them this week...

    ReplyDelete
  84. Interesting Article:
    http://economictimes.indiatimes.com/markets/stocks/views/recommendations/q4-is-likely-to-be-a-blockbuster-for-ajanta-pharma-prakash-diwan/articleshow/18221563.cms

    ReplyDelete
  85. Dear Friend
    Thanks a lot for replying....and your reply gives a lot of assurance and get a feel that it is just a matter of time before things will fall back is place,few things that I now feel are a)Demand remains for this product can't skip medicine as lifestyle related diseases are increasing B)The awards that company is getting goes to show that management is good and efficient c) and as they are scaling up PFI and FD, margins are bound to increase so do agree with your target of 1000 as growth is continuous and capacity expansion is nearly finished and they can announce it anytime...
    Other thing worth noting is that they are going on the lines of what I remember Jack Welch of GE use to say what ever you do make sure you are the best in the world in that....
    and he was one of the best business Chairman the world has ever seen....Good luck to you and may God bless u.

    ReplyDelete
  86. hi, kunal

    first thanx lot for your such a kind information about company like granuels, photoquip, etc..

    i have some granuels india in my portfolio with high prise, but i am not worry because of your information in blog,,,

    plz tell any other midcap company to invest 2/3 year..

    and what about cravatex?

    ReplyDelete
  87. Thanks for the kind words...

    Target of 1000 is being too optimistic for now...
    That will happen, once the company as they have said, will start generating 5000 Crs of yearly revenues, i.e. around 2017 time frame....
    For now, we will judge quarter by quarter, because what has happened this time, wasnt at all, as expected...

    We will wait and see if they really are able to complete the expansion process in these 3 months, and then set a target...

    Lets first wait for 2 more quarters and see if our initial target of 250-290 is achieved in next 6 months or not...

    ReplyDelete
  88. Hi Krunal,

    Cravatex, I would say, is another very small cap company that hasnt had much recognition in markets yet...

    Right now, the stock is under pressure because of weakness in rupee..
    The main business of cravatex involves importing products from foreign countries and selling it in India....Right now, because of weakening rupee, they might not be able to show good profits...But its long term prospects still seems bright....

    One thing is for sure, these small cap names, when starts going upwards, they are unstoppable....

    Out of what I suggested, so far in Moneycontrol or in my Blog, the similar journey was seen in Granules India first, then in Money Matters, then Thangamayil, and now Ajanta Pharma....

    All these small cap names, generally test investor's patience...but pays off well, if their grwoth is intact...

    ReplyDelete
  89. Thanks Kunal..........Lets hope for the best and its kind of you to remove time and share knowledge with us...Lets hope as things were once rosy with Granules those times come back and I feel this is not wishful thinking...as U rightly said they generally test investors patience and in case of Granules if they walk their talk.

    ReplyDelete
  90. Once again, we have great increase in Revenues posted by Thangamayil in Q3-2012 results...

    Sales has increased by 41% YoY and 17% QoQ, which is great...

    The Net Profits of the company has gone done severely, mainly on account of advertisement and publicity expense, as mentioned by the company's management in the press release....
    The Publicity and Advertisement Expense gone up from 1.6 Crs last year to 11.8 Crs this year....
    Expenditure on Consumption Of Raw Materials has also gone up on account of higher sales....

    So, all in all, the results indicates a very bright future of the company (that may not be applicable for short term traders)

    But it seems that, long term investors can make a fresh entry around 280-300 levels.....

    ReplyDelete
  91. Granules India Optimistic After Q3 Results:

    http://www.in-pharmatechnologist.com/Ingredients/Granules-optimistic-after-poor-Q3-PFI-bottleneck-will-be-unblocked

    Lets hope that it works as expected...... and if it does happen, we, probably are in for a biggest reward till now...
    Fingers Crossed!!!!

    ReplyDelete
  92. Thangamayil has again gone so cheap, that promoters have started buying again from open market...
    They bought 10000 shares from open market around 275 levels....
    I think, this move supports my view that those who missed on 200 levels, can do partial fresh buying at these levels...

    ReplyDelete
  93. Link for reference:

    http://www.moneycontrol.com/livefeed_pdf/Feb2013/Thangamayil_Jewellery_Ltd_050213_SAST.pdf

    ReplyDelete
  94. Photoquip India coming out with numbers on 15th Feb.
    I am not expecting much from this quarter.
    May be we will have a better set of numbers on Q1 2013.

    ReplyDelete
  95. I am expecting a loss in 3rd quarter as well as 4th quarter of 12-13 as Company must have incurred substantial sum on advertisement, brand promotion expenses with very little to top-line. Amit has rightly observed that Photoquip will blow-out before 2020 !

    ReplyDelete
  96. I am a fan of revenues rather than net profits..

    I would be happy if they are able to post 25% jump in revenues, even while showing loss...

    Profits is something which will be recovered later, but sales should not go down....thats what happened with them during quarters of this fiscal....

    CORVI seems to be my hope for future, atleast for now...

    ReplyDelete
  97. Dear Kunal
    Hi....Kindly give me the email address of Granules for me to communicate to the company....Dont you think it is high time the company Chairman or Mr Krishna should come out with some assurance to retail investors cause literally we are seeing our capital depreciate by half....so if we get some assurance from the senior people from the company at least the stock price sliding will stop...otherwise if it continues to slide this way very soon pledge shares might come to the market....it is sheer bad luck such good company and just by delaying of expansion this has happened.
    Thanks

    ReplyDelete
  98. investorrelations@granulesindia.com

    ReplyDelete
  99. Granules India announced financial results for its fiscal year 2013 ended March 31, 2013. Granules consolidated net sales increased 17 per cent to Rs 764 crore while consolidated net profit increased nine per cent to Rs 33 crore.

    The company reported sales of Rs 204 crore., its highest ever, in Q4FY13, an increase of 9 per cent compared to the comparable quarter in FY12. In addition, PBT before F/X increased by 15 per cent to Rs 18 crore.

    Granules also announced the completion of the expansion at its Gagillapur Facility. The company has commenced operations of the new capacity and expects to scale up operations over the next several months. Due to the delay in the scale-up of the new capacity, margins slipped since the company incurred costs to run the new facility without a concurrent increase in production. The company expects margins to increase since production is increasing at the facility.

    “While we faced a setback in scaling-up our formulation expansion, we are optimistic for the future. Our strategy has enabled us to entrench ourselves within our industry and become synonymous with the products we produce. Due to our ability to provide high-quality products at a cost effective price, we have been able to work closely with market leaders which has resulted in sustainable revenue. We have made significant improvements over the past year and believe our foundation is stronger than ever. In FY14, we’ll continue to shift to formulations which will result in an improvement in profitability.” said Krishna Prasad, Managing Director of Granules India.

    ReplyDelete