In the recent management interviews, Mr Krishna Prasad has been constantly highlighting the company’s great business prospects for the next 2-3 yrs.
In the concall too, he did sound extreemly bouyant wrt company’s new expansion plans and growth thereof.
I wonder, what makes him contemplate an EXIT right at the cusp of great potential growth.
Or is it that he is expecting / expected to fetch great valuations???
Lets see what happens from here on.
Disc : invested.
If this news is true then I would assume promoters would sell the stake at premium to current market price. How this will impact retail investors like us?
I see two scenarios …
Does anyone know how it will impact us? My current assumption is that in any case it will be positive for retail investors.
Please help throw some light. Any recent case where similar deal was struck? And what was the impact?
I just found one recent buy out deal from promoter plus open offer…
This article mentions that Granules is in CRAMs , which I do not think is correct. Granules does not get any revenue from Contract Research.
While the news of promoters looking for suitors to sell the business is not new, this time the level of details being provided in the articles give more reasons to believe that such discussions are indeed happening. However we should still wait for the promoters to openly say yes or no to the news; a silence from them would almost confirm the news. Assuming that promoters are indeed interested in selling the business I would be curious to know the reason behind such a move given that 1) they just came out of huge capex 2) Business has been doing great - topline, bottomline and cash flows (except in last quarter) being strong, 3) And so there does not seem to be any compelling financial reason for such a move. Anyway, in stead of guessing I would rather wait for words to come out directly from the promoters.
However assuming the news to be true, I would like to imagine that it would be a bad news for long term shareholders and good news for short/medium term shareholders. Without going into the details of the valuations at which such deals have happened for the pharma companies in the recent past, there is no doubt that API companies are possibly seeing the strongest tailwind and business prospect right now. This should reflect in the valuation.
Meanwhile, while all this is happening the company got approval for marketing a drug in US from FDA - Dexmethylphenidate HCl extended-release capsules. It is used for the treatment attention-deficit hyperactivity disorder. Granules’capsule product is bioequivalent to the reference drug Focalin. Dexmethylphenidate HCl ER Capsules had U.S. sales of approximately $556 millions for the most recent twelve months ending in July 2020.
Cheers,
Krishna
There could be many reasons why promoters quit. Check this news
https://www.ndtv.com/south/7-half-marathons-in-7-days-hyderabad-couple-creates-world-record-736176#:~:text=7%20Half%20Marathons%20in%207%20Days%3A%20Hyderabad%20Couple%20Creates%20World%20Record,-SouthWritten%20by&text=Krishna%20Prasad%20said%20everyone%20is,seven%20continents%20in%20seven%20days.
Finally, why would it be bad news for long term shareholders? Most probably a PE would be a buyer, which will enhance the management credibility and lead to re-rating of the stock further. Point in case being Sequent Scientific, JB Chemical and some in other sectors like Essel Propack, Hexaware
I am going to miss Mr. Krishna Prasad. He was one of my favourite promoters. However, he is 65. He has managed to take granules from a small paracetamol facility 36 years ago to where it is today which is extraordinary. I believe he has done everything he could and he just wants to enjoy the fruits of his labour now since he is losing his most valuable asset ie time. It was very apparent from his interviews that he has set everything up for the next 5 years but there’s no plan for post that. In the best cast scenario i believe he will do his due diligence and a PE investor who can scale granules up for the next decade+ will come in since the base is now so solid that even if someone tried to make the company collapse they’d have to try really hard to do so. Overall I’m sad about what we are going to lose but I’m excited to see where the future goes.
No immediate exit plans by Promoters
Management response on exit news
Given the exceptional business performance of the company over last 2-3 years and its strong growth prospects, the promoters were approached by many external agencies for value unlocking ideas and the promoters engage with many such specialist in their personal capacity. However, currently there are no concrete plans of an exit by the promoters and any potential future plans in this direction would be properly communicated to the regulators and shareholders. The promoters are fully engaged in the business and are committed to Granules future growth prospects.
Can you please share the source of your comment / reply to the management’s response to their exit news?
The comment is based on direct communication to CS of company.
what fundamentals does the link has? Its not related to company at all rather its one personal activity of promoter and NOT linked anywhere to business.
Sorry now I understood your question. You clicked on the earlier link which was on activity of the promoter. That link was to show promoters varied interest. The second link is to fundamental data about the company with dupont, working capital and cashflow analysis.
How can we say PBIT margins improvement is due to product pricing alone? They have setup huge capacity in last few years and now may be operating leverage at play.
Disclosure: Invested since 5+ years
Yes I agree
Capacity utilisation coupled with improved pricing is the result of higher pbit
Totally agree, they should benefit once capacity utilisation increases. Also since some of the capacities are in US, they have higher margin as compared to Indian facilities.
Granules can see some buying from Index Funds
FTSE Global Equity Index – APAC Sep 2020 Additions / Deletions
From some of the important names –
Large Cap Inclusions –
SBI Cards And Payment Services
Adani Green Energy
Midcap Inclusions –
GlaxoSmithKline Pharmaceuticals
Trent Ltd
Small Cap Inclusions –
Adani Gas
Crisil
Schaeffler India
AstraZeneca Pharma India Limited
Navin Fluorine International
Timken India
KEC International Ltd.
Metropolis Healthcare
Procter & Gamble Health
Dixon Technologies (India)
Deepak Nitrite
Aegis Logistics
Suven Pharmaceuticals
Tata Elxsi
JB Chemicals & Pharmaceuticals
Rallis India
Granules India
E.I.D. Parry (India)
Amber Enterprises India
Can Fin Homes
Infibeam Avenues
APL Apollo Tubes
Orient Electric
Some of the exclusions
Tata Chemicals
Dish TV India
Jammu & Kashmir Bank
Thomas Cook (India)
Sadbhav Engineering
Repco Home Finance
Va Tech Wabag
CG Power and Industrial Solutions
CNBC reports rumours that promoters are.looking to exit. Hence the stock corrected on Friday. Any article anyone can share?
Good interview this morning on CNBC. Stake sale=fake news…380 cr capex in the pipeline for new products (nums if I remember correctly). If someone remember the name, plz mention.
Latest update from management interaction
The promoter exit news has surfaced for 3rd time in last 15 months - Don’t wish to waste time in handling such fake news rather would like to utilize efforts for growing business and create value
Existing products being sold in US is being taken to EU & other geographies itself will contribute to top line / bottom line
New approval last week for Dexmethylphenidate HCl extended-release & will launch by end of CY
We have 4 approvals yet to launch by Dec - each contributing 15-30 mn
Expecting another big FDA approval for MUPS (food supplement) in Jan having good market & less producers
MUPS is a multiparticulate pharmaceutical solid dosage form produced by compressing a mixture of drug-containing pellets and powder excipients.
Products made in US have pricing pressure,
Products made in India have already squeezed margins
Capex : Total 380 Cr / 250cr capex in MUPS in Hyderabad facility (one of the largest facility in world)
Most of APIs produced are for captive consumption… don’t see revenue growth as we sell very less percentage of produced APIs
FD / PFI will grow
