Granules India margin rebounds, but shares fall 2.55% next day
Operating margin recovered 9.51 percentage points from Q4FY26 as expenses declined, while the higher tax rate kept net profit growth below pre-tax profit growth.
Filed 21 Jul 2026, 12:12 IST · Granules India Ltd (GRANULES)
Key takeaways
- Consolidated net profit rose 59.77% YoY to Rs 179.96 cr, helped by revenue growth outpacing expenses.
- Sequentially, expenses grew 1.73% while revenue rose 0.42%, narrowing operating margin by 0.99 percentage points.
- The stock fell 3.50% five sessions after the results, a larger move than its 2.55% typical absolute reaction.
Price around the results
YoY growth continued, but Q1 lost sequential momentum
Consolidated revenue grew 22.04% YoY, while expenses increased 18.11%, allowing operating profit to rise 37.37%. Profit before tax grew 66.33% YoY, but sequentially fell 8.37% as revenue was nearly flat and operating profit declined 3.75%. Net profit also fell 10.72% QoQ to Rs 179.96 cr.
Sequential margin pressure came from costs, not interest
Operating margin narrowed to 22.95% QoQ because expenses grew faster than revenue, while interest costs fell 35.39%. The tax rate rose 1.97 percentage points sequentially and 3.08 percentage points YoY, limiting the conversion of pre-tax profit into net profit. Other income contributed only 0.94% of pre-tax profit, so earnings quality was not materially dependent on it.
Margin rose for four quarters before the Q1 pullback
Operating margin had increased from 20.39% in Q1FY26 to 23.94% in Q4FY26 before declining to 22.95% in Q1FY27, its first sequential fall across that four-quarter run. Granules was 0.28 percentage points above the 22.67% median operating margin of 61 Healthcare peers that had reported the quarter.
The post-results decline was modest at first, then widened
The stock was down 0.05% on the results date and 2.55% after one session, widening to a 3.50% decline after five sessions. The one-session move matched the company's 2.55% median absolute reaction across its last eight results, while the five-session fall was larger. The reaction overlaps with a corporate action, which limits how much of the move can be attributed to the results alone.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,477 cr | ₹1,471 cr | +0.42% | +22.04% |
| Other income | ₹2 cr | ₹25 cr | -90.81% | — |
| Expenses | ₹1,138 cr | ₹1,119 cr | +1.73% | +18.11% |
| Operating profit | ₹339 cr | ₹352 cr | -3.75% | +37.37% |
| Operating margin (%) | 22.95% | 23.94% | — | — |
| Interest | ₹21 cr | ₹33 cr | -35.39% | -11.19% |
| Depreciation | ₹80 cr | ₹82 cr | -2.57% | +15.69% |
| Profit before tax | ₹240 cr | ₹262 cr | -8.37% | +66.33% |
| Tax | ₹60 cr | ₹61 cr | -0.58% | +89.53% |
| Net profit | ₹180 cr | ₹202 cr | -10.72% | +59.77% |
| EPS (₹) | ₹7.26 | ₹8.23 | -11.79% | +56.47% |
Operating margin of 22.95% compares with a Healthcare sector median of 22.67% across 61 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -0.05% | +0.16% |
| Next session | -2.55% | — |
| 5 sessions | -3.50% | -2.46% |
| 15 sessions | -1.55% | — |
Volume on the results session was 2.47× its 20-day average.
What to watch
- Whether operating margin recovers above 22.95% after the sequential decline.
- Whether expenses grow more slowly than revenue after rising 1.73% QoQ against revenue growth of 0.42%.
- Whether the tax rate moves below or above 25.14% without a material increase in other income from its 0.94% share of pre-tax profit.