Granules India Faces USFDA Scrutiny, Resulting in Stock Sell-Off
On September 12, shares of Granules India, a notable player in the pharmaceutical industry, experienced a significant sell-off, plummeting by 15% intraday. This decline follows the issuance of six observations by the US Food and Drug Administration (USFDA) concerning the company’s Gagilapur facility located in Hyderabad, Telangana. The inspection took place from August 26 to September 6, raising serious concerns over the facility’s compliance with regulatory standards.
Findings from the USFDA Inspection
During its inspection, the USFDA highlighted several critical violations at the Gagilapur facility, including:
- Failure to clean equipment and utensils at proper intervals.
- Inadequate review processes for unexplained discrepancies.
- Lack of clear written responsibilities for the quality control unit.
- Non-compliance with established written procedures.
- Poor maintenance of buildings and facilities.
Market Reaction and Stock Performance
Granules India’s stock commenced trading on a down note at Rs 677 on the Bombay Stock Exchange (BSE). As the trading session progressed, the share price continued to decline, ultimately hitting a low of Rs 566.80โapproximately a 16% drop from its previous close. The companyโs market capitalization currently stands at Rs 14,000 crore.
Yearly Performance and Growth Metrics
Despite the recent setbacks, Granules India has shown a robust performance over the past year. The stock has surged approximately 87.68% over the last twelve months and has gained 40% since the beginning of 2024. A key driver for this growth was the approval received in August 2024 for Granules Pharmaceuticals, a subsidiary of Granules India, for its abbreviated new drug application (ANDA) for Glycopyrrolate Oral Solution 1mg/5mL from the USFDA.
Financial Highlights
The financial health of Granules India appears to be strong despite recent market fluctuations. In the April to June 2024 quarter, the company reported a nearly threefold increase in net profit, soaring to Rs 135 crore compared to Rs 48 crore in the same quarter of the previous year. Additionally, revenue from operations rose significantly to Rs 1,180 crore, up from Rs 985 crore in June 2023.
Shareholding Structure
As of June 2024, promoters retain a 38.87% stake in Granules India, indicating confidence among key stakeholders despite the regulatory challenges faced by the company.
Conclusion
Granules India’s recent stock decline following the USFDA observations highlights the ongoing challenges the company must navigate while maintaining its growth trajectory. As the company addresses the identified issues and continues its operational endeavors, stakeholders will be keenly watching how Granules India manages its compliance and leverages its strong performance metrics to recover investor confidence.
