Granules India is a powerful growth stock
01-05-2014 • About Granules India (
$GRANULES) • By InTwits
Granules India is an attractive growth stock in Pharmaceuticals industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Granules India showed growth in the last financial year. Granules India's revenue surged on 43.4% in FY2014. At the same time the company well managed its profitability and showed even faster growth in EBITDA of 62.0% for the same period.
In the last 3 years Granules India showed fast revenue growth of 32.1% from FY2011 to FY2014 annually. EBITDA surged on 34.7% from FY2011 to FY2014 annually.
Granules India ($GRANULES) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 15,027 | 4,752 | 6,540 | 7,644 | 10,959 |
|---|
| Revenue growth, % | | -68.4% | 37.6% | 16.9% | 43.4% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 622 | 649 | 885 | 979 | 1,587 |
|---|
| EBITDA growth, % | | 4.4% | 36.2% | 10.7% | 62.0% |
|---|
| EBITDA margin, % | 4.14% | 13.7% | 13.5% | 12.8% | 14.5% |
|---|
| Net Income | 304 | 209 | 300 | 326 | 752 |
|---|
| Net Income margin, % | 2.02% | 4.40% | 4.58% | 4.26% | 6.87% |
|---|
| |
| CAPEX | 128 | 250 | 578 | 1,164 | 2,667 |
|---|
| CAPEX/Revenue, % | 0.851% | 5.26% | 8.84% | 15.2% | 24.3% |
|---|
| Debt | 1,467 | 1,374 | 2,152 | 2,705 | 4,417 |
|---|
| Cash | 41 | 53 | 225 | 327 | 160 |
|---|
| Net Debt/EBITDA | 2.3x | 2.0x | 2.2x | 2.4x | 2.7x |
|---|
| |
| ROIC, % | | 12.8% | 15.8% | 14.2% | 18.4% |
|---|
| ROE, % | | 9.9% | 12.9% | 12.5% | 23.9% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. The company's EBITDA margin surged on 1.70 pp from 12.8% to 14.5% in FY2014. In the longer period Granules India showed EBITDA margin growth of 0.800 pp from 13.7% in FY2011 to 14.5% in FY2014.
We call Granules India an attractive growth stock as together with the growth it delivers high ROIC at 18.4%. During the last three years it surged - it was 12.8% in FY2011. It's average level of ROIC for the last three years was 16.1%.
The company's Net Income margin surged on 2.60 pp from 4.30% to 6.90% in FY2014. In the longer period Net Income margin surged on 2.50 pp from 4.40% in FY2011 to 6.90% in FY2014.
Granules India operates at ROE of 23.9%. For the last three years the average ROE was 16.4%.
Capital expenditures (CAPEX)
To this fast growth Granules India had to invest in CAPEX.Granules India's CAPEX/Revenue was 24.3% in FY2014. The company's CAPEX/Revenue surged on 19.1 pp from 5.26% in FY2011 to 24.3% in FY2014. It's average level of CAPEX/Revenue for the last three years was 16.1%.
Leverage (Debt)
Granules India has medium debt level at 2.7x Net Debt/EBITDA to maintain high growth. In the longer period the company's leverage surged on 0.65x from 2.03x in FY2011 to 2.68x in FY2014.
Peers in Pharmaceuticals
Below you can find Granules India benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Sanjivani Paranteral ($SANJIVIN) | | | | 1.2% | 5.8% |
| |
|---|
| Median (1 company) | | | | 1.2% | 5.8% |
|---|
| Granules India ($GRANULES) | | -68.4% | 37.6% | 16.9% | 43.4% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Omega Laboratories ($OMEGALAB) | | | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (1 company) | | | 0.0% | 0.0% | 0.0% |
|---|
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Sanjivani Paranteral ($SANJIVIN) | | | 8.8% | 8.3% | 7.5% |
| |
|---|
| Median (1 company) | | | 8.8% | 8.3% | 7.5% |
|---|
| Granules India ($GRANULES) | 4.1% | 13.7% | 13.5% | 12.8% | 14.5% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Omega Laboratories ($OMEGALAB) | | | 0.0% | 0.0% | 0.0% |
| Godavari Drugs ($GODAVARI) | | | | | |
| Sanjivani Paranteral ($SANJIVIN) | | | 14.2% | 13.0% | |
| |
|---|
| Median (3 companies) | | | 7.1% | 6.5% | 0.0% |
|---|
| Granules India ($GRANULES) | | 12.8% | 15.8% | 14.2% | 18.4% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Godavari Drugs ($GODAVARI) | | | | 1.7x | 0.0x |
| Sanjivani Paranteral ($SANJIVIN) | | | 4.3x | 4.2x | 0.0x |
| |
|---|
| Median (2 companies) | | | 4.3x | 3.0x | 0.0x |
|---|
| Granules India ($GRANULES) | 2.3x | 2.0x | 2.2x | 2.4x | 2.7x |
