Buy Granules India Ltd for Target Rs 1,010 by Choice Institutional Equities
Controlled Substances at Scale, Complex Generics and Oncology Next, Peptides Long Dated
In its Granules 2.0 investor meeting, management mapped clear, wellplanned themes it expects to drive its next phase of growth. Controlled substances, complex generics and oncology launches from FY28E form the medium-term growth engines, while peptide CDMO provides a longer-term growth option. The pivot from volume to value is supported by a strong legacy franchise and a net-cash balance sheet following the Sep-26 warrant proceeds. Organic capex of ~INR 20 Bn over the next 3–4 years is expected to remain milestone-linked
Controlled substances is already at scale, with Granules moving from #8 to #3 in the US by value, based on the latest IQVIA data cited by the management.
We see the medium-term growth engines as relatively de-risked, supported by existing capabilities and a strong pipeline of launches. Peptide CDMO provides additional long-term optionality in a fastgrowing market. FTF filings are already in place, while the mix shift is becoming visible in reported numbers
EBITDA margin conversion and a clean Gagillapur re-inspection remain the key near-term catalysts. We maintain our estimate, with Revenue/EBITDA/PAT projected to expand at respective CAGRs of 21%/25% /32% in FY26–29E. We maintain our TP at INR 1,010 and continue to view Granules as a high-conviction pick as these growth engines translate into earnings.
Key Themes Discussed
Controlled Substances’ Scale is Proven and Still Compounding
* Granules ranks #3 in US controlled substances by value, up from #8 in July 2025. Adderall XR share has risen from 5% to 29%.
* Supply remains constrained, with the Adderall shortage unresolved as of June 2026. Granules benefits from near-100% service levels, a clean DEA record and US-based API and finished dosage manufacturing.
* Pipeline depth provides further upside, with methylphenidate coverage rising from 6% to 87% and dexmethylphenidate from 39% to ~89% of market value. Adderall IR and three further launches are due in the next ~12 months.
* Competitor supply constraint create an additional advantage, with several approved players unable to manufacture complex products consistently and retain quota.
Complex Generics and First-to-File Launches Lift Value Per Product
* Complex generics rose from 1% of revenue in FY20 to 33% in FY26, shifting growth from volume-led filings towards higher value per product.
* Exclusivity supports pricing, with the FDA estimating a ~52% price decline after the second generic entrant.
* Two sole-FTF ANDAs, gLumryz and gDyanavel, target a combined US innovator market above USD 350 Mn.
* Sole FTF opportunities are increasingly scarce. Granules targets 10–20% of its portfolio in these products, with 95+ US ANDAs filed and annual filings scaling from 6-10 towards 10-15.
Oncology Reset Adds a Third Medium-term Engine
* Granules is shifting towards selected oncology molecules with differentiated formulations and early entry, leveraging existing API, formulation R&D, ASD and Vizag Unit V capacity.
* Capital deployment remains milestone-linked across development, regulatory and commercial stages, limiting upfront risk. Revenue contribution is yet to begin.
* Two products have been filed, with one already present in ~15 countries. ~6 additional filings are planned by early next year, including sole FTF and NCE-1 opportunities. Launches are expected from FY28E.
* Competition remains active among domestic peers, but Granules is targeting differentiation through formulation depth and early entry rather than portfolio breadth.
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