Granules India (GRANULES)

FairStock Score: 47/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong recent operating momentum: latest quarter sales ₹1,388 Cr, net profit ₹150 Cr; trailing sales growth 14.18% and profit growth 13.85%.
• Sound financial health: debt/equity 0.45, Altman Z-score 3.34, Piotroski F-Score 8/9, and positive free cash flow of ₹178 Cr.
• Decent capital efficiency: ROE 14.68% and ROCE 15.14%.
• Promoter holding of 38.02% aligns owner interest with minority shareholders.

Concerns

• Valuation offers no margin of safety: P/E 26.00, P/B 4.49, and EV/EBITDA 73.33 against Graham Number ₹277.54 and DCF intrinsic value ₹391.62.
• Growth is moderate, not extraordinary: 5-year revenue CAGR only 6.72% and PEG 3.61, making the premium multiple difficult to justify.
• Investor income is minimal: dividend yield just 0.26%.
• Current price of ₹686.75 implies significant downside risk if growth reverts to historical levels.

AI Analysis

Granules India is a steady pharmaceutical business, but as a value investor I must separate a decent company from a decent stock. The numbers show consistency: latest quarter sales of ₹1,388 Cr and net profit of ₹150 Cr, with trailing sales growth of 14.18% and profit growth of 13.85%. It earns ROE of 14.68% and ROCE of 15.14%, and carries debt/equity of only 0.45. A Piotroski score of 8/9 and Altman Z-score of 3.34 reinforce balance-sheet comfort. Free cash flow of ₹178 Cr is positive. The FairStock Score of 55/100 calls it 'steady,' and I agree. My concern is the price. At ₹686.75, the market is paying 26 times earnings and 4.49 times book. The Graham Number is only ₹277.54, and even a DCF estimate of ₹391.62 sits far below the current quote. The stated margin of safety of -109.79% tells me I am being asked to pay far more than conservative intrinsic value. The 5-year revenue CAGR is just 6.72%, and the PEG ratio of 3.61 suggests the recent growth is not cheap. EV/EBITDA of 73.33 is particularly stretched. On top of that, the dividend yield of 0.26% provides almost no income while I wait for value to show up. If this were a fast-growing franchise with wide pricing power, I might tolerate a premium multiple. But Granules India looks like a dependable operator, not a compounding machine. I admire the business quality, but I cannot ignore the absence of margin of safety. My temperament says: wait for a better price, or for materially stronger growth to justify today's valuation.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer