Granules India Buyback Offers Hope Amid Coronavirus Turmoil
Q4 Will Be Impacted By Coronavirus-Related Export Restrictions
Granules India’s buyback offer seems to be timed right. As the novel coronavirus crisis batters the Indian stock market, a 32% premium offered by the company is an attractive proposition for investors. However, its Q4 performance will see a blip on account of paracetamol export restrictions.
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A recent focus on high-margin generic formulations, strong contract manufacturing business, and expected cash inflow from stake sales in joint ventures could make Granules India an attractive buy for PE funds.
In a bid to ensure long-term medicines security, the Indian government has earmarked $1.32bn to promote domestic production of 53 APIs, including lopinavir and ritonavir currently being evaluated to treat COVID-19 cases, as well as antibiotics, for which India is highly dependent on China.
India permits medicines placed on a restricted list to be exported from SEZs and under advance licenses, but paracetamol exporters hope for more easing as restrictions begin to hurt. Meanwhile, the government asks industry to ensure four months of stock as it balances medicines security with economic interest.