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Granules India Limited (NSE:GRANULES) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of GRANULES, it is a financially-robust company with an impressive history of performance, trading at a great value. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Granules India here.

Very undervalued established dividend payer

GRANULES delivered a bottom-line expansion of 78% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did GRANULES outperformed its past performance, its growth also exceeded the Pharmaceuticals industry expansion, which generated a 25% earnings growth. This is what investors like to see! GRANULES is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that GRANULES manages its cash and cost levels well, which is a crucial insight into the health of the company. GRANULES’s earnings amply cover its interest expense. Paying interest on time and in full can help the company get favourable debt terms in the future, leading to lower cost of debt and helps GRANULES expand.

GRANULES's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of GRANULES's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, GRANULES's share price is trading below the group's average. This supports the theory that GRANULES is potentially underpriced.

Next Steps:

For Granules India, there are three essential aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for GRANULES’s future growth? Take a look at our free research report of analyst consensus for GRANULES’s outlook.

2. Dividend Income vs Capital Gains: Does GRANULES return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from GRANULES as an investment.

3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of GRANULES? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.