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Is Caplin Point Laboratories a Multibagger Stock based on Warren Buffet Analysis?

Is Caplin Point Laboratories a Multibagger Stock based on Warren Buffet Analysis?

NSE Code: CAPPL.NS

BSE Code: 524742

URL: http://www.caplinpoint.net/

Caplin Point Multibagger Stock

About Company

Caplin Point was established in 1990 to manufacture a range of ointments, creams and other external applications.

The Company was listed in 1994 following its IPO which was oversubscribed 117 times, the proceeds of which were deployed in setting up a manufacturing facility at Pondicherry. Thereafter, the Company expanded its product range and increased its production capacity.

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, ANVISA-Brazil and INVIMA-Colombia.

Positive Factors

Consistent 33% Compounded Growth in Sales & Profits, this is really Awesome and it proves the Credibility of their Research & Sales capacity.

Innovative Products clocking around 500 and contributes to New products developments, Developments NSAIDs , Anti-Depressants, Anti-emetic, Anti- Coagulants, etc

Technological Improvements, R&D enhancement, QC support in analytical methods, Proper Adherence to Regulator requirements, Data Mining in Retail should enhance Increased Sales & Profit Efficiency.

Almost Zero Debt company, Less Interest paid, thus More Safer Investment.  Higher Capital Employed usage in 2017 is a remarkable factor.

Increase in Promoter Holdings, Shows good Sign of Confidence in Company & Future. Additionally, the high amount of Promoter Holding supports Increase in Price during good times.

Expansion into New Markets including Latin America, GDP growth in World, 17% Pharmaceuticals Market Growth in China ensures the 33%Growth will be Real in next 5 Years.

High Growth, OP, NP, ROE valuation parameters.

Traded at Discount currently, which is another Boon of Market Crash.  I see the Downside risk is limited.

Caplin Point 2.0
As per the Caplin Point 2.0 Strategy, the company is expanding into US Market, South American Market and Investing in 10X educational academy. Over the years, the Company invested its resources in the CP4 unit dedicated to the manufacture of injectables for the regulated US market. The Company invested ~H350 crore in opex and capex through accruals to enter the US market, which could strengthen the Company’s sectoral respect and Competitiveness. During the last decade, the Company increased its Latin American footprint from two countries to 10 countries.

Key Developments
Caplin Point invested in its business with the objective of strengthening its prospective products pipeline. The Company filed 2 ANDAs in its name. The Company commenced commercial deliveries to the US market through partners. It was required to provide credit to new customers. It made commercial entries into Chile, Paraguay, Panama and Costa Rica. The company launched products in niche segments (soft gels, suppositories and branded/OTC range), strengthening revenues.

Concern Factors

High in Book Value Ratio, which is usually a Curse of the High Growth companies.

Already a Multibagger of Past.

Generic Drug, Technology competition from Peers pose threat on revenue & PAT.

Currency Fluctuation risk.

Geographical Risk due to Excess exposure to Latin America regions.

Financials

P&L shows progress in Income & Profit

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Balance Sheet shows displays Capital Employed increased 59%, Net Worth increased 62%.

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Cash Flow Statement shows free Operating cash flow.

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Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash FlowYesimage
Durable Competitive AdvantageYesimage
Future Growth DriversModerate.image
Conservative Debt (long term debt < 3 Net Profit)Yesimage
Debt Equity Ratio, Current RatioDER is Zero, Current Ratio is High.image
Return on Equity must be Above AverageYesimage
Low CAPEX required to maintain current operationsModerateimage
Management is holding / buying the stockYesimage
Price is Under Valued (< intrinsic value)Yes

As per the Futurecaps Intrinsic Value Calculator the company is at a discount of 50%.

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Stock Price is consolidating (now)Yesimage
Stock Price is growing in past years along with EPS growthYesimage

Additional Futurecaps Checklist

Consolidated PE, PB RatioPB is highimage
Cash Flow Positive, Net Profit % greater than 8%Yesimage
Paying Dividends, TaxYesimage
EPS Growth RateGoodimage
Jump in Trailing Result EPSYesimage
Jump in Quarterly Result EPSYesimage
Expected Gain in 5 Years5Ximage
Price Movement Graph, 52 Week High & LowYesimage
Volume AnalysisGoodimage
Power of BrandYes.

(the company have heavy brand reputation)

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Corporate Governance, Reputation of LeadersPromoters selling holdings is an Issue in Past.image
Fraud reportedNot in current searchimage
Annual ReportGoodimage

Declaration

Based on the Value & Growth parameters, the company hold Multibagger properties.

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Note Free Multibaggers will not be tracked & Hence no follow-ups will be provided.

Disclaimer

Futurecaps is an independent equity research Company. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advise.  The report is purposefully kept concise.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

 

About Futurecaps

Futurecaps is a 12+ year experienced Indian Stock Market Advisory with SEBI Registration.

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2 Replies to “Is Caplin Point Laboratories a Multibagger Stock based on Warren Buffet Analysis?”

  1. thanks for free MB analysis of caplin point  good information what  do you expect caplin lab would give how many fold returns aftre 10 years ?

    thanks  saumil desai

    1. 10 year is too far to observe, lot of things can change in mean time, anyways:
      1) If it can maintain 33% growth rate then 40 Times it can go up in 10 years
      2) If it can maintain 20% growth rate then 20 Times it can go up in 10 years

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