Granules India Ltd

I have not done any projections myself, will not comment on the exact numbers. Turnover assumptions look good, I would broadly go with a 16% EBITDA scenario (though management is indicating higher), cost is getting passed on with a lag as you have rightly said. If after than they can’t do 15-16% they should not be in business! Also historically they have done around 20%.

But I am more positive on higher share from associates, the Omnichem thing should probably show traction in some time.

What asset accretion assumptions have you taken for the depreciation calculations? Other than balance work on oncology unit etc and routine capex there should not be much more asset additions. Interest I would go with 35-40 cr, on back of envelope calculations (assuming broadly same level of debt, small uptick in interest rates). Also tax should probably be around 31-32% rather than 35%.

My TP would be somewhere in the 120-140 range but I will add this is a company where you have to keep a close watch. I am expecting they will implement the recent expansions well but balance sheet is over-extended and is something doesn’t go as per plan there can be a downward spiral. But at current price I would say most risks are pretty well factored. PE of 14 on this low earnings base with most of the capex done, looks good to me.