Thread by @PrasadWakchaure

My Thread on #CaplinPointLab

Sales Growth 3 years CAGR 40%,
Profit Growth 3 years CAGR 56% but

Stock price 3 years CAGR -14%!

Do you see value?

Because 10 Year Stock CAGR is 67%.

The company has grown from 15 Cr Mcap in 2010 to 3500 Cr today with negligible debt.

Always expanding through internal accruals. Negligible debt between 2011-15 and debt-free from 2015.

This is a well-known multi-bagger of last pharma bull run till 2015.

So let's focus on what has changed in the last 5 years when stock corrected to half from peak. (2)

Key transformations in last 5 years:

1. Entered regulated market in 2018 (US, UK, EU)
2. Shift from generic to branded generic (25% revenue currently)
3. Entered high margin injectable & Ophthalmic segment
4. 400 Cr Capex to serve US business through internal accruals (3)

5. Only formulation player earlier to now vertically integrated pharma
6. Doing backward integration of API, this will remove the overhang of China dependency
7. CRO Division for bioequivalence studies with 75 beds (4)

RnD Expenditure: 160 Cr Capex done over the last 5 years, spending 9% of revenue in RnD, 85 Cr spent in 2019.

The number of Scientists increased from 100 to 400 in the last 4 years. Healthy spending. Company is willing to acquisition in API space without taking debt (5)

Caplin steriles: A subsidiary for a regulated market:

Injectables are high margin business, due to high FDA complacence needs.

Caplin steriles is 400 Cr facility for injectable funded by Fidelity international (US-based fund having 6 trillion $ AUM) with (6)

capital infusion of 220 Cr has the capacity of crores of injectables in ampules, vials, etc.

3x Capacity expansion of injectables ongoing currently.

Key partners in USA: Fresenius Kabi & Meitheal Pharma both well-known companies with a presence in the regulated markets. (7)

Plans to launch 40 ANDA in the next 4 years that is 4 times to current 10 ANDAs.

5 successful audits by USFDA & EU authorities.

Amaris Clinical - CRO Division for bioequivalence studies. Commenced in 2019, 29 Cr Capex, 55 employees currently, (8)

serve internally and the latter will serve other customers.

API Division: Ongoing development of 22 API inhouse, had put up an Intermediate & API lab in Hyderabad to try and fill some of the gaps, invested 65 Cr in API+CRO in 2019. (9)

The stock was hampered due to sector consolidation and some doughts on management.

The stock was trading at 60x PE multiple in 2015 when the last pharma rally peaked out. Current PE 16x. Will this pharma rally take it to previous highs? (10)