Granules India Limited's (NSE:GRANULES) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Granules India will host its Annual General Meeting on 6th of August
• Salary of ₹18.0m is part of CEO Krishna Chigurupati's total remuneration
• Total compensation is 588% above industry average
• Granules India's EPS declined by 8.8% over the past three years while total shareholder return over the past three years was 56%

The share price of Granules India Limited (NSE:GRANULES) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 6th of August. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Granules India

Comparing Granules India Limited's CEO Compensation With The Industry

According to our data, Granules India Limited has a market capitalization of ₹142b, and paid its CEO total annual compensation worth ₹316m over the year to March 2024. We note that's a decrease of 11% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹18m.

On examining similar-sized companies in the Indian Pharmaceuticals industry with market capitalizations between ₹84b and ₹268b, we discovered that the median CEO total compensation of that group was ₹46m. This suggests that Krishna Chigurupati is paid more than the median for the industry. Moreover, Krishna Chigurupati also holds ₹46b worth of Granules India stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹18m	₹18m	6%
Other	₹298m	₹336m	94%
Total Compensation	₹316m	₹354m	100%

Talking in terms of the industry, salary represented approximately 98% of total compensation out of all the companies we analyzed, while other remuneration made up 2% of the pie. In Granules India's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Granules India Limited's Growth Numbers

Over the last three years, Granules India Limited has shrunk its earnings per share by 8.8% per year. Revenue was pretty flat on last year.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Granules India Limited Been A Good Investment?

Most shareholders would probably be pleased with Granules India Limited for providing a total return of 56% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Granules India.

Important note: Granules India is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com