Caplin Point Labs: PAT growth of 24% in H1-24 with expectation of good numbers in FY25 & FY26 at PE of 23
CAPLIPOINT has a strong track record of 9 years of YoY Revenue & PAT growth. Its focus is to first deliver cash flow and then look at bottom line and topline growth
1. Pharma company focused on LatAm + Africa
caplinpoint.net | NSE: CAPLIPOINT
CAPLIPOINT outsources 45% of production (China: 35%; Indian vendors:70%) and in-house production is at 55%
2. FY14-23: PAT CAGR Of 35% & Revenue CAGR of 27%
9 years of YoY Revenue & PAT growth
3. Solid FY23: PAT up 22% and revenue up 16% YoY
4. Q1-24: PAT up 21% and revenue up 14% YoY
PAT up 3% and revenue up 2% QoQ
5. Strong Q2-24: PAT up 26% and revenue up 15% YoY
PAT up 11% and revenue up 4% QoQ
6. H1-24: PAT up 24% and revenue up 14% YoY
7. Business metrics: Strong return ratios & cash generation
Most important of all is to ensure that we are maintaining adequate fiscal discipline, stay debt free, focus on our cash flow, bottom line and topline in that particular order in all of our areas of expansion.
8. Outlook: Strong growth roadmap till FY26
i. Revenue growth of 16-18% in FY24
Additional revenue of Rs 230-265 cr which is a 16-18% on FY23 revenue. H1-24 revenue growth of 14% is in line with the 16-18% expectation for FY24
One, our additional line of Softgel we produce a business of INR80 crores to INR90 crores from LatAm markets for the current year.
Two, the brand marketing that we started in Central America, that is LatAm would also fetch us a revenue of INR30 crores to INR40 crores.
Three, the introduction of generic business in West Africa might also result in an additional revenue of INR10 crores.
Four, our new initiatives in CIS and Southeast Asia could also fetch us a business of INR20 crores to INR25 crores for the current financial year.
Five, Caplin Steriles would generate an additional income of INR90 crores to INR100 crores for the current year.
ii. Maintaining EBITDA and PAT margins in FY24
FY24:
outsourcing of onco business has continued to contribute our revenue and profits
CSL line 5 which is a new line which increased the capacity
the new registration of soft gels will also contribute to the top and bottomline of our current financial year.
We are sure of maintaining current metrics such as EBITDA and PAT in financial year 2023-2024.
iii. Growth roadmap in place for FY25 & FY26
See, we will continue to grow the way we have been growing and I would prefer to give actually good numbers, maybe starting from '25, '26,
FY25:
CSL line 5 and line 6 will contribute to our growth
increased ANDAs
three replacement of line one with a high speed lines
completion of onco OSD such as tablet and capsule will also increase the revenue
FY26:
we expect completion of onco injectables in addition to OSD to expand OSD general facilities for the new markets.
New and larger geographies of various countries such as Mexico and others where the increase in registration will also contribute to our growth.
iv. Maintaining 24-25% PAT margin
that gross margin of 57.4% I think may not be sustainable in the long run. We will always hope it should be anywhere between 55 and 56% and PAT of about 24 to 25%.
9. PAT growth of 24% and revenue growth of 14% in H1-24 at a PE of 23
10. So Wait and Watch
If I hold the stock then one may continue holding on to CAPLIPOINT
Coverage of CAPLIPOINT was initiated after Q4-23 results. The investment thesis has not changed after a strong H1-24. The only changes are the delivery of a strong H1-24 and the increased confidence in the management to deliver a strong FY24.
CAPLIPOINT H1-24 performance is in line with expectation of 16-18% growth planned for FY24
Roadmap for FY25 & FY26 is in place and better growth expected from FY25 onwards
See, we will continue to grow the way we have been growing and I would prefer to give actually good numbers, maybe starting from '25, '26,
11. Or, join the ride
If I am looking to enter CAPLIPOINT then
24% PAT growth delivered in H1-24 at a PE of 23 makes CAPLIPOINT fairly valued in the short term
Over the medium to long term CAPLIPOINT is promising good numbers from FY25 which provides upside potential in the stock from a long term perspective.
Previous coverage of CAPLIPOINT
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Disclaimer
It is an analysis of the company data and not a stock recommendation
My analysis can be completely wrong and can change the next minute based on changes in my understanding of the company
I look to own good companies at prices where there is a path to market beating returns over decades