Granules India (BSE Code 532482)

An advisor to the corporate sector in general and pharmaceutical companies in particular is bullish on Granules India, a Hyderabad-headquartered pharmaceutical company engaged in the manufacture of several off-patent drugs, including Paracetamol, Ibuprofen, Metformin and Guaifenesin on a large scale for customers in regulated and rest-of-theworld markets.

The company has been steadily growing on the financial front. During the last five years, its sales turnover has expanded from Rs 1,349 crore in fiscal 2017 to Rs 3,134 crore in fiscal 2021 with the profit at net level inching up from Rs 142.83 crore to Rs 652.78 crore during this period. The company’s financial position is very sound, with reserves at the end of March 31, 2021 standing at Rs 2,128 crore – over 93 times its equity capital of Rs 22.87 crore. The company’s borrowings are on the reduction path and as a result the interest burden fell from around Rs 33 crore in fiscal 2018 to Rs 24 crore in fiscal 2021.

Future prospects are all the more promising. Its performance on the export front is steadily improving and its products are being sold in 55 countries at present. It is now planning to launch 5-6 new products in the US market. The company looks forward to launch an MUPS-based product to ramp up earnings in the second half of fiscal 2023. The pharma expert insists that the stock price will reach near the Rs 400 mark by the end of the year.

(CMP Rs 250.50, 52 week H/L Rs 405/232, BV Rs 95.20, FV Re 01)

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CDSL Ltd

There has been a steady decline in the stock price of CDSL on widespread selling and this may continue for some more time. However, genuine long-time investors should not worry as the downward drift is a temporary phenomenon and once the selling pressure ebbs, fundamentally strong stocks with tremendous growth potential like CDSL are bound to rebound.

A leading stock market expert and advisor insists that when the bearish trend comes to an end, CDSL will be among the first to move up and the stock price may reach even the Rs 1,500 level within a year or so.

Of course, as the selling pressure continues, the stock price of CDSL has sought lower levels from Rs 1,734 to Rs 1,074. Viewed in the context of the bearish phase in most countries, it may go down further to below Rs 800.

But this should not be a cause of concern for long-time investors as the company enjoys the fruits of duopoly and the numero uno position in the depository services sector with a 55 per cent marketshare and the top five stock broking houses being CDSL clients.

Of course, the company has posted a weak third quarter of fiscal 2022, with revenues declining by 9.9 per cent qoq with total revenues declining by 1.34 per cent to Rs 162.93 crore while the profit at net level fractionally dropped to Rs 84 crore. CDSL’s growth rate is expected to moderate to the pre-pandemic level of 16 per cent CAGR, following two years of solid growth. The company derives 68 per cent of its revenue from market-linked activity which clocked 70 per cent yoy growth. The company expects steady annuity, strong growth in BO accounts and IPO revenues led by LIC, and growth in KYC revenues with the start of Aadhar-based KYC.

(CMP 1164.00, 52 week H/L Rs 1735/840, BV Rs 104.60, FV Rs 10)

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Cupid Ltd(BSE Code 530843)

According to the market grapevine, Cupid Ltd, a renowned manufacturer of male and female condoms, will be changing hands very soon.

A foreign company, it seems, is very much interested in acquiring this Nashik-based company which is known for its high-quality products.

Cupid is the first company in India and only the second in the world to supply WHO/UNFPA prequalified female condoms. Again, it is the first company in the world to obtain the status of prequalification by WHO/UNFPA for the supply of both male and female condoms.

The company, which started with a manufacturing capacity of 160 million pieces a year in 1993, has by now expanded its capacity to 560 million pieces a year

The company has been growing steadily under the able leadership of Om Garg, Chairman and Managing Director. During the last 7 years, its sales turnover has advanced from Rs 44 crore in fiscal 2015 to Rs 144 crore in fiscal 2021, with the profit at net level shooting up from just Rs 8 crore to Rs 29 crore during this period. As the company has great growth potential, some foreign companies are contemplating acquiring it.

Mr Garg is a far-sighted, hard working and highly efficient administrator but for personal reasons has apparently preferred to sell off the company.

(CMP Rs 255.20, 52 week H/L Rs 354/192, BV Rs 103.00, FV Rs 10)

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