Granules

This Hyderabad company, maker of pharmaceutical compounds in granular form posted a strong performance for Q2FY15 with a 16% (YoY) rise in consolidated net sales at Rs.308 crore. Finished Dosages continued to be the largest contributor of revenue. EBITDA margin was up 444 bps at 17.2% and it ended the quarter with a net profit at Rs.22 crore, up 47%. This included the performance of Auctus Pharma, contributing Rs.25 crore to the topline and loss of Rs.3.4 crore.

Regulated markets such as North America and Europe account for 65% of revenue, while the balance comes from Latin America and RoW.  During the quarter the company’s interest outgo has risen almost 50% to Rs.8 crore with its borrowings currently at around Rs.450 crore.

During the quarter, the company commercialized the sale of Abacavir, an anti-retroviral pharmaceutical drug. Granules developed the API through its internal R&D Team and intend to commercialise an additional 4-5 APIs during the financial year. The company is setting up a wholly-owned subsidiary in the U.S., which will focus on its formulation business. The next big trigger for the stock will be the commencement of commercial production of its JV with Belgium-based Ajinomoto Omnichem to set up an API plant in Vizag at an investment of $20 million. This is expected in current fiscal and over the next two years, one could see substantial revenue add up from this JV.