Financial Results for March 31, 2014
Link: Click Here
Board recommends Final Dividend:
Granules India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 24, 2014, inter alia, has recommended a final dividend of Rs. 3.50 per share representing 35% of Paid Up Capital for the financial year 2013-14.
Press Release:
Link: Click Here
New Investor Presentation:
Link: Click Here
The stellar performance continues for Granules India with company clocking highest ever revenues once again, and it seems that the company met all the expectations from the utility of capacity expansion at Gagillapur facility, which commenced a year ago.
The company during Jun '13 mentioned that, with expansion, they are expecting the sales of 1000 Cr for the full year, and they almost got 1100 Cr.
The R&D expense has almost gone up by 200%, which further enhances the confidence about the future of the company.
Last year, Finished dosages accounted for minimum sales, among API, PFI and itself, and this year, they were able to turn it around with finished dosages accounting for maximum sales out of 3. Its good for the company, as finished dosages is the highest margin business among the 3. Hence, if it continues to improve, we might see further growth in net profit compared to sales.
The company is confident of improving utilization further in future, as they did this year.
Speaking of consolidated numbers,
For Q4 FY'14,
Revenues stood at 317 Cr Vs 204 Cr, registering a growth of 55%.
Net Profit stood at 23.62 Cr Vs 12.41 Cr, registering a growth of 90%.
EPS stood at 11.68 Vs 6.18
For full year FY'14,
Revenues stood at 1096 Cr Vs 764 Cr, a growth of 46%.
Net Profit stood at 75.23 Cr Vs 32.57 Cr, a growth of 131%.
EPS stood at 37.2 Vs 16.21
My Views:
The company was surely able to justify the severe rise in stock price over last 1 year from 100 to 310 levels. But it seems that the story is not ending here. If the results continue to impress in same way, we might see another such journey in times to come. With annual EPS of 37, the stock is still trading at a P/E below 10, even after more than 200% rise in last 1 year. That speaks largely about the undervaluation still existing in the stock price.
With management looking confident of achieving similar growth going ahead, it raises the confidence level of investors in the company.
Still won't be giving any specific target on the counter, but looks like, one can continue to buy/hold for long term. I will keep on posting further updates if any.
Note:
Recommendation made above is without considering the hazardous impact that election outcome can have on stock markets. So, one has to take his/her own decision based on ones own belief.
All the best!!!!
Link: Click Here
Board recommends Final Dividend:
Granules India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 24, 2014, inter alia, has recommended a final dividend of Rs. 3.50 per share representing 35% of Paid Up Capital for the financial year 2013-14.
Press Release:
Link: Click Here
New Investor Presentation:
Link: Click Here
The stellar performance continues for Granules India with company clocking highest ever revenues once again, and it seems that the company met all the expectations from the utility of capacity expansion at Gagillapur facility, which commenced a year ago.
The company during Jun '13 mentioned that, with expansion, they are expecting the sales of 1000 Cr for the full year, and they almost got 1100 Cr.
The R&D expense has almost gone up by 200%, which further enhances the confidence about the future of the company.
Last year, Finished dosages accounted for minimum sales, among API, PFI and itself, and this year, they were able to turn it around with finished dosages accounting for maximum sales out of 3. Its good for the company, as finished dosages is the highest margin business among the 3. Hence, if it continues to improve, we might see further growth in net profit compared to sales.
The company is confident of improving utilization further in future, as they did this year.
Speaking of consolidated numbers,
For Q4 FY'14,
Revenues stood at 317 Cr Vs 204 Cr, registering a growth of 55%.
Net Profit stood at 23.62 Cr Vs 12.41 Cr, registering a growth of 90%.
EPS stood at 11.68 Vs 6.18
For full year FY'14,
Revenues stood at 1096 Cr Vs 764 Cr, a growth of 46%.
Net Profit stood at 75.23 Cr Vs 32.57 Cr, a growth of 131%.
EPS stood at 37.2 Vs 16.21
My Views:
The company was surely able to justify the severe rise in stock price over last 1 year from 100 to 310 levels. But it seems that the story is not ending here. If the results continue to impress in same way, we might see another such journey in times to come. With annual EPS of 37, the stock is still trading at a P/E below 10, even after more than 200% rise in last 1 year. That speaks largely about the undervaluation still existing in the stock price.
With management looking confident of achieving similar growth going ahead, it raises the confidence level of investors in the company.
Still won't be giving any specific target on the counter, but looks like, one can continue to buy/hold for long term. I will keep on posting further updates if any.
Note:
Recommendation made above is without considering the hazardous impact that election outcome can have on stock markets. So, one has to take his/her own decision based on ones own belief.
All the best!!!!
Hi Kunal, good analysis as always. But I am a bit disappointed by the price action today. Just 3% up today. There seems to be heavy selling at the counter. Are we missing something?
ReplyDeleteHi Sameer,
DeleteThanks for the appreciation.
Its difficult to judge the outcome on basis of just a day post result. The reason is that there will be plenty of intra-day orders placed today.
So majority of movements today will be driven by such orders.
The results are very good, and you will get returns from here also, if you are ready to wait for longer term.
Don't think we should be judgemental based on today's movements. Let time speak.
All the best!!!!
What about debt Kunal? Don't you think a re rating would have happened had it not been for the debt? I am not comfortable at the management's delay in addressing the debt issue - thoughts?
ReplyDeleteHi Kumar,
DeleteDebt is a concern, and hence I am advising to go for long term in this counter. As most of their debt has been utilized in acquisitions, people will realize its value once the subsidiaries starts performing well.
For eg., you try observing the standalone numbers of Tata Motors and Sun Pharma. The revenues are constantly going down yoy. But the fact that their acquired companies are doing so well, that their consolidated numbers are looking extremely good, and hence the stock performance.
I don't mind waiting in case of Granules, as I am confident about their subsidiaries performing well, in coming years. Also, their standalone unit has plenty of juice left in it.
Otherwise, considering your point, I don't deny the fact that re-rating would have come much earlier, if debt would have been under control.
I feel that sooner or later, they will adress this issue, so I don't mind waiting for that much period.
Also, as always, I prefer that people book profits from time to time, to avoid risk and play safe. Its not at bad that Granules has already appreciated more than 200% in past 1 year.
Finally, one has to take the decision based on his thinking. :)
Regards.
Good numbers from Cera as well...
ReplyDeleteEPS of 15 is a surprise....
Good for long term holding...
100% dividend declared i.e. 5 Rs per share...
For Granules, I'm sitting on 110% profit but own very few quantities, say 100, So is it good for me to book partial profit or can buy even at this levels to gain better returns in the years coming. I have that much patience looking at growth story of Granules.
ReplyDeleteWhat do you suggest in that case. BTW..nice work your doing for small investors like us..Kudos to you.
Thanks,
Mayur
Mayur,
DeleteHolding 100 is not considered as few.. :)
You have shares worth more than 30k, which is very good.
While doing profit booking in a fundamentally good company, you have to make sure that you don't repent if it goes up from those levels.
Profit booking is not just done because you think, that share price will come down. It is done, so that, my allocation in a single company, is not very high, and my portfolio remains diversified.
When you say that you have 100 shares and sitting at profit of 110%, it means your average buying price is around 150, which implies that your initial investment in Granules India was around 15k.
So, if I were you, I would not mind doing profit booking time to time (like at 350, then 450 and so on...), until, I have share worth 15k in my portfolio, to play safe.
That's what I believe as a small retail investor, because our money is hard-earned.
You have to form your thinking, and act according..
Go with your gut feel.. :)
Regards.
Dewan Housing hit 250 today, and with that it achieved the target with which it was suggested here:
ReplyDeletehttp://fundamentalstockideas.blogspot.com/2013/06/few-more-multibaggers-for-long-term.html
As normal process, I would recommend a partial profit booking, and hold remaining quantity. We will get a better idea once results are out on 30th April..
For granules kindly elaborate debt:equity ratio. How to calculate it ? e.g. for fy13 they said its 0.95.
ReplyDeleteHi Vivek,
DeleteDebt:Equity Ratio = (Total Debt / Shareholder Equity) * 100
where Shareholder Equity = Total Share Capital + Reserves (Networth)
As you are talking about FY13, on consolidated basis,
Shareholder Equity = 20.13 + 254.41 = 274.86 Cr
Total Debt = 260.96 Cr
Calculate using above formula.
If you want to calculate from Balance sheet shown in Result pdf,
then,
Total Debt = Long term borrowings + Short term borrowings
Shareholder Capital = Sub-total Shareholders funds as in pdf
Hope that helps.
Sorry.. neglect (* 100) above.. its just a ratio...
DeleteAlso, make sure that result sheet of granules contains balance sheet for standalone unit only...
Thank you...
DeleteThe link for Updated Investor Presentation from Granules India has been kept in the main post above....
ReplyDeleteIn the 14th page of that updated presentation, they have mentioned about the increasing debt, and reasons for it. Good to see, that within next 2 years, they are planning to bring the debt:equity ratio below 1.
DeleteHello kunal,
ReplyDeleteWell thanks for regular updates.
I was going through granules investors presentations, both latest updated and the old one I had saved (for 9 months).
FD capacity had shown sequential de growth qoq I think.
Assume q1- 1300bn
q2- 1500bn
q3- 1500bn
So making nine months 4300bn.
(trying to make q3 possible lowest round figure)
And 5711-4312=1399 bn. for q4
What you think?
Thanks
Hi Anand,
DeleteHad a discussion on above issue with management, and this is what they replied:
"Finished Dosage capacity and production is probably among the most misunderstood parts of our business. Unlike our API facilities which are dedicated for particular products, our PFI and Finished Dosages facilities are multi-product facilities. This means that the capacity isn’t fixed per se since it shifts depending on the product mix. In regards to FD capacity, we state our capacity as 18 billion tablets. This assumes that we make Paracetamol 500 mg tablets, a standard product. Now, if we make Metformin or Ibuprofen, the capacity changes. Adding to that, Metformin 1000 mg has a different capacity than Metformin 850 mg. To answer your question, while our absolute volumes might change, it doesn’t necessarily mean it’s because of a drop in demand. Production varies by product mix as well as packaging options (We can produce more tablets for bulk shipments vs. bottle packaging) We have a healthy order position for tablets and if anything, we are constrained by a lack of PFI capacity in FY15. This is why the MD in our analyst call yesterday, mentioned that we will be further expanding PFI capacity in FY15. If you check in with me in a few days, perhaps Wednesday, I’ll have a transcript that I can share as well as upload to the website."
Regards.
Will be posting the details of Cera numbers tomorrow morning....
ReplyDelete