Granules India Q2 profit falls on weak demand in North America, Europe

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(Reuters) – Drugmaker Granules India reported a 4.8% fall in its second-quarter profit on Wednesday, dragged by a slow demand in the North American and European markets.

Consolidated profit fell to 972.3 million rupees ($11.54 million) for the quarter ended Sept. 30, from 1.02 billion rupees a year earlier.

Granules, which generates 66% of its revenue from North America and 19% from Europe, posted an 18.7% fall in its revenue from operations.

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KEY CONTEXT

The company said its quarterly sales were impacted by a voluntary pause in manufacturing and distribution from its Gagillapur facility near Hyderabad, which deals with finished dosage and pharmaceutical formulations, due to an inspection by the U.S. Food and Drug Administration.

The drugmaker’s revenue fell due to weak sales and price cuts from competition, despite expectations that Indian active pharmaceutical ingredient, or API, makers such as Granules would benefit from a rising demand in Europe and the U.S.

PEER COMPARISON

Valuation (next 12 Estimates (next 12 Analysts’ sentiment

months) months)

RIC PE EV/EBI Price/ Revenue Profit Mean # of Stock to Div

TDA Sales growth (%) growth (%) rating* analyst price yield

s target** (%)

Granules India 19.49 11.50 – 14.87 36.32 Strong 3 0.85 0.27

Buy

Glenmark Life 23.44 15.72 – 11.92 12.61 Buy 6 0.98 2.12

Sciences

Laurus Labs 56.43 22.49 – 13.87 86.09 Hold 11 1.18 0.16

Divi’s Laboratories 65.63 46.64 15.77 15.93 26.45 Hold 23 1.29 0.52

* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT

JULY-SEPTEMBER STOCK PERFORMANCE

**

**

— All data from LSEG

— $1 = 84.2475 Indian rupees

(Reporting by Yagnoseni Das in Bengaluru; Editing by Rashmi Aich)