Granules India shares tumble almost 8% after USFDA issues warning letter for its Gagillapur facility

Shares of Granules India tumbled nearly 8 percent in intra-day trade on February 28, 2025, after the United States Food and Drug Administration (US FDA) issued a warning letter to the company’s Gagillapur facility.

US FDA Warning and Regulatory Impact

In a regulatory filing, Granules India confirmed that the US FDA issued a warning letter on February 26, 2025, following its inspection in August 2024.

The letter highlighted four key areas of concern, all of which had been previously noted in the FDA Form 483 observations. Granules stated that it has made significant progress in addressing these concerns, with most corrective actions completed, while the remaining ones are on track as per schedule.

Despite the warning, the company clarified that the manufacturing and distribution of existing products from the Gagillapur facility remain unaffected. However, the warning letter may delay the FDA review of pending product applications from this site until compliance issues are fully resolved.

Granules also stated that the FDA has not indicated any further escalation, and the company plans to respond within the stipulated timeframe while seeking a meeting with the regulator to demonstrate continued compliance efforts.

Following the six Form 483 observations issued post-inspection, Granules India has implemented a comprehensive remediation plan aimed at strengthening quality control and compliance at the Gagillapur facility.

Financial Performance

In Q3 FY25, Granules India reported a 6 percent year-on-year decline in consolidated profit after tax, which fell to ₹118 crore, compared to ₹126 crore in the same quarter of the previous fiscal.

The company’s revenue from operations declined to ₹1,138 crore in the third quarter, down from ₹1,156 crore a year ago.

Despite the regulatory challenges, Granules India Chairman & Managing Director Krishna Prasad Chigurupati remained optimistic, 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 Performance

Granules India’s stock fell 7.7 percent in intra-day trade on February 28, hitting a day’s low of ₹466.85. This marks the third consecutive session of losses for the stock, following declines of 1.5 percent and 0.3 percent in the previous two sessions.

After the latest dip, the pharma stock is now over 35 percent below its peak of ₹724.55 recorded in September 2024, but it has risen 22 percent from its 52-week low of ₹382.05, recorded in April 2024.

In February alone, the stock has shed over 15 percent, following a 6 percent decline in January. Over the past one year, Granules India has lost more than 10 percent of its market value.

Company Overview

Granules India is a Hyderabad-based pharmaceutical company engaged in the production of active pharmaceutical ingredients (APIs), pharmaceutical formulations, and intermediates. The company manufactures a wide range of generic drug products, including over-the-counter (OTC) and prescription medicines, serving global markets across therapeutic segments such as cardiovascular, central nervous system, and diabetes treatments.

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