Caplin Point Laboratories fundamental analysis

Caplin Point Laboratories fundamental analysis

• Market Cap:  3,918 Cr.
• Current Price:  517.95
• 52 weeks High / Low  524.00 / 176.20
• Book Value:  125.31
• Stock P/E: 18.22
• Dividend Yield: 0.41 %
• ROCE: 48.53 %
• ROE: 37.72 %
• Sales Growth (3Yrs): 39.55 %
• Listed on BSE and NSE
• Company Website
• Face Value:  2.00

• PEG Ratio: 0.28
• Promoter holding: 69.03 %
• Pledged percentage: 0.00 %
• Debt:  38.61 Cr.
• Price to Earning: 18.22
• EPS:  28.37
• Net profit:  215.00 Cr.
• Profit growth: 21.76 %
• Profit growth 7Years: 64.30 %
• Net profit preceding 12months: 215.92 Cr.
• Profit growth 3Years: 56.55 %
• Dividend yield: 0.41 %
• Debt to equity: 0.04
• Sales last year:  648.69 Cr.
• Sales growth: 33.07 %
• Unpledged promoter holding: 69.03 %
• Investments:  60.79 Cr.

Caplin Point Laboratories is one of the fastest growing mid cap pharmaceutical companies in India which produces, develops and markets wide range of generic formulations and branded products and exports to overseas market. The Company has product licenses for over 3100+ products across the globe. It had taken the unique step of creating last mile logistical solutions for its exclusive distributors across Latin America and various parts of Africa to expand its business all over the globe. The stock has a market cap of Rs3,548 cr. Matthews India Fund is the largest non-promoter institutional holder holding 1.73% as on June 2020. The last two days delivery volume of the stock was 2.0x and 1.5x above average of the last 30 days delivery volumes.
 

Investment rationale
 

Range of products under formulation segment: The Company has wide range of products for both regulated and emerging markets. The Company focused on the emerging markets of Latin America, Caribbean, Francophone and Southern Africa and is today one of the leading suppliers of Pharmaceuticals in these regions, with over 2000 product licenses across the globe. The Company is entering into the regulated markets for injectables through its state of the art manufacturing plant, capable of handling liquid injectables in Vials, Ampoules, Lyophilized Vials and Ophthalmic dosages. The facility is approved by US-FDA, EU-GMP and INVIMA. The company has further pipeline for 300 products for emerging markets. On overall basis, the company has formulations for 400+ products covering 36 Therapeutic Segments in 23 countries.

 

Entry in US markets to boost the overall growth: Caplin Point entered US market in 2017-18 with launch of Ketorolac Inj, currently owned by Baxter. It has invested ~Rs.400 crore in Capex and Opex in the last 5 years through internal accruals to enter the US and regulated markets. It will be launching 5 more products by Aug 2020. Currently, Caplin Point is the only player in current size segment to have an Injectable plant that is approved several times by US FDA, owning ANDAs.

 

Robust FY20 performance: Caplin Point registered a strong FY20 performance with a robust revenue growth of 36% coupled with stable margins. The EBITDA during the year crossed Rs300 cr milestone during the year with a strong growth of 20% yoy. It received 9 approvals out of 17 ANDAs filed and launched 4 new products with the next 5 to be launched by August 2020.

 

Outlook & Valuation: The Company on a consolidated basis has grown at a CAGR of 38.6% and 65.8% at topline and bottomline levels for last five years. It enjoys debt free status and generates healthy return ratios 38-45%. We believe generic pharma industry will do well in the current market scenario as it has seen a good correction in the last one year and is now re-rating amidst the ongoing Covid-19. The generics business constitutes 75% of the total revenue of Alembic Pharma and thus we believe the company would be a beneficiary of the current market situation. At current price, the stock is trading at 13.2x of its one year forward earnings which looks attractive given its strong growth prospects.

 

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