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Moving Up the Value Chain with a Strong Launch Pipeline

We believe GRAN is steadily moving up the value chain, evolving from an API and PFI player into a focussed complex generics business, with CDMO emerging as the next growth platform. Despite the recent inspection outcome at GGP, we believe the company remains on track to sustain its growth trajectory, as the outcome does not disrupt its launch pipeline. Five launches, including two controlled substances, are planned for H2FY27E. Products previously ready for launch at GGP are also being transferred to other sites for commercialisation. The increasing contribution from complex generics and controlled substances will support margin expansion. We project EBITDA margin to reach ~25% by FY29E as compared with 22.1% in FY26. We maintain our positive view on the company and retain our target price of INR 1,010 and ‘BUY’ rating, implying a PEG ratio of 0.8x.

Soft Topline Overshadows Healthy Margin Expansion

* Revenue grew 20.3% YoY / 5.6% QoQ to INR 15,600 Mn (vs. CIE estimate: INR 15,662 Mn).

* EBITDA grew 21.3% YoY and was flat QoQ to INR 3,376 Mn; margin expanded 19 bps YoY but contracted 131 bps QoQ to 21.6% (vs. CIE estimate: 24.5%).

* PAT increased 39.2% YoY and 1.0% QoQ to INR 1,818 Mn (vs. CIE estimate: INR 2,181 Mn).

Four Growth Levers Set to Drive 21.7% Revenue CAGR and Earnings Upswing

Four Growth Levers Set to Drive 21.7% Revenue CAGR and Earnings Upswing GRAN continues to deliver a healthy growth, and we project this momentum to sustain. We forecast a revenue CAGR of 21.7% in FY26–29E, alongside healthy margin expansion. We believe growth will be driven by four key levers:

* Controlled Substances: GRAN ranks #3 in the US controlled substances market by value, with Adderall XR holding a 29% market share. Two launches are planned for H2FY27.

* Complex Generics: GRAN continues to increase its focus on complex generics, with the revenue contribution rising from 1% in FY20 to ~34% in Q2FY27. The company has a pipeline of ~26 approved ANDAs, representing a TAM of USD 35 Bn. A majority are complex products, with at least three launches planned for H2FY27E.

* Oncology: Launches are projected to begin in FY28E, with two filings already completed and six more planned by early next year. GRAN is targeting differentiation through formulation depth and early market entry rather than portfolio breadth.

* Peptide CDMO: This is a long-term growth driver, with a meaningful contribution to revenue and margin projected from FY29E. The company has seen increased RFP and RFQ activity, while capacity expansion continues as planned.

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