Granules India Shares Plunge 8% After USFDA Warning for Gagillapur Facility
Shares of Granules India tumbled nearly 8% in intraday trading on February 28, 2025, after the United States Food and Drug Administration (USFDA) issued a warning letter to the company’s Gagillapur facility.
USFDA Warning and Compliance Challenges
In a regulatory filing, Granules India confirmed that the USFDA issued the warning letter on February 26, 2025, following an inspection conducted in August 2024.
The letter highlighted four key concerns, all of which had been previously identified in FDA Form 483 observations. The company reassured investors that it had made significant progress in addressing these concerns, with most corrective actions completed and the remaining ones on track as per schedule.
Despite the regulatory setback, Granules India clarified that the manufacturing and distribution of existing products from the Gagillapur facility would remain unaffected. However, the warning letter could delay the FDA review of pending product applications from this site until compliance issues are fully resolved.
Granules India also mentioned that the FDA has not indicated any further escalation at this stage. The company plans to respond within the stipulated timeframe and seek a meeting with the regulator to demonstrate its continued compliance efforts.
Following the six Form 483 observations post-inspection, Granules India has implemented a comprehensive remediation plan to enhance quality control and regulatory compliance at the facility.
Financial Performance Amid Regulatory Hurdles
Granules India recently reported a 6% year-on-year decline in consolidated profit after tax (PAT) for Q3 FY25, falling to ₹118 crore compared to ₹126 crore in the same quarter of the previous fiscal year.
The company’s revenue from operations declined to ₹1,138 crore in the third quarter, down from ₹1,156 crore in Q3 FY24.
Despite these challenges, Krishna Prasad Chigurupati, Chairman & Managing Director of Granules India, remained optimistic about the company’s future, stating:
“We continue to sustain our profitable growth in the finished dosages segment, driven by our North America business. We are enhancing quality and compliance through systemic improvements across our operations, including Gagillapur.”
Stock Market Reaction and Performance Trends
Following the USFDA warning letter, Granules India’s stock plunged 7.7% in intraday trade on February 28, hitting a day’s low of ₹466.85.
This marks the third consecutive session of losses for the stock:
- February 27: Declined 1.5%
- February 26: Declined 0.3%
The stock has now dropped over 35% from its 52-week high of ₹724.55 (September 2024) but remains 22% above its 52-week low of ₹382.05 (April 2024).
Stock Performance Over Time:
- February 2025: Lost 15%
- January 2025: Declined 6%
- Past One Year: Lost over 10% of its market value
Company Overview and Business Operations
Granules India, headquartered in Hyderabad, is a leading pharmaceutical manufacturer specializing in Active Pharmaceutical Ingredients (APIs), pharmaceutical formulations, and intermediates.
The company caters to global markets across various therapeutic segments, including:
- Cardiovascular diseases
- Central Nervous System (CNS) disorders
- Diabetes treatments
Granules India produces a wide range of generic drugs, including over-the-counter (OTC) and prescription medicines, serving key international markets, including North America and Europe.
Financial Ratios and Key Metrics
| Financial Metric | Value |
|---|---|
| Market Capitalization | ₹12,500 crore (approx.) |
| P/E Ratio | 15.2 |
| EPS (Earnings Per Share) | ₹22.50 |
| Debt-to-Equity Ratio | 0.45 |
| Return on Equity (ROE) | 14.8% |
| Return on Assets (ROA) | 8.2% |
| Operating Profit Margin | 18.5% |
Outlook: Can Granules India Recover?
While the USFDA warning has led to short-term volatility, analysts believe that Granules India’s strong product portfolio, global presence, and commitment to regulatory compliance could help it recover in the long term.
Investors will closely monitor:
- Granules India’s response to the FDA warning
- Future inspections and compliance updates
- The company’s ability to maintain revenue growth despite regulatory challenges
For now, the stock remains under pressure, and market participants are advised to exercise caution while assessing Granules India’s trajectory in the coming quarters.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.