Granules India slumps nearly 6% on weak Q1 result due to cyber attack impact

Pharmaceutical major Granules India dropped nearly 6 per cent in trade on Thursday after the company reported poor financial numbers for the quarter ending June 30, 2023. Granules India posted a sharp decline in profit and revenue in the June quarter for FY 2023-24 while the numbers also missed street estimates.

The company’s Q1FY24 performance was severely affected by a cyber security attack in May which impacted its IT assets and led to disruptions in its operations.

However, the company claimed that post the incident the business has returned to near normalcy. "Operating expenses were higher, in line with the expected revenue, and hence the gap in sales had a severe impact on PAT," said Chairman and Managing Director Krishna Prasad Chigurupati.

June quarter financial results

The company’s consolidated revenue stood at Rs 986 crore for the quarter ending in June 2023, seeing a decline of 3 per cent as against Rs 1,020 crore reported in the quarter ending in June 2022. The company fell marginally short of the ZeeBiz estimate of Rs 993 crore in consolidated revenue.

Net profit declined by 62 per cent year-on-year to Rs 47 crore as against Rs 127 crore in Q1FY23. Gross margins improved marginally by 100 bps from 50 per cent to 51 per cent. EBITDA declined YoY by 35 per cent to stand at Rs 137 crore against Rs 212 crore that was reported in the same quarter period in the previous financial year. EBITDA was lower than Zee Biz research estimates of Rs 174 crore.

Operating margins declined to 14 per cent as against 21 in Q1FY23. Margins declined double the amount estimated by Zee Biz, which had pegged margins at 17.5 per cent.

Current Trends

Apart from its IT incident, the company has also been facing stiff price competition in the United States and Europe, which has resulted in lower profits.

Shares of the company were trading at Rs 308 apiece, down 4.45 per cent, on BSE at 1:20 PM on Thursday.