Management of the company has always been humble and do not disclose any financial targets of the company other than expected growth of 20-25% in top line and bottom line for coming few years. I got hands on an article with Forbes Asia thanks to one of the fellow board member at MMB.
Following are the key take away from the interview:
1. Company increased sales from $18Million in 2010-11 to $40Million in 2014-15 and expected to increase to $150Million till 2019-20. This will be almost 4x from the current year sales. So, if I take the FY2015-16 as base year and USD-INR rate as 1:66 that is CAGR of 32% for next 3 years as shown below
2. 90% of their revenue comes from Latin America and only 10% from Africa. Even though the Latin American is bad wrt to crime rates. I personally feel it is way better than African sub continent. However, recent free fall in the fx rates can have impact on their sales expectations.
3. More than 50% of their revenue is basically a trading activity as they take supplies from China and supply to their markets in Caplin's name. This agility helps them adjust to market demand very quickly.
4. Caplin will enter US markets through ANDA's for self and with partners by FY 2019-20. However, they will expand their foot print in Latin American from 7 at present to 12 by 2018. New markets will be namely Brazil, Chile, Ecuador, Costa Rica and Colombia.
5. Product expansion: The company plans to ncrease the number of product licenses from 1700 in June 2015 to 2200 in the near future. Even if I assume it to be 2018. We know about the pipeline for future growth. This will be in addition to stable revenue stream to be added via supply of injectables to European and Brazilian market.
6 Margin expansion: The net profit margin of the company is rising from 15% to 18% at present over last few years is likely to improve further.
7 Valuation: Sales are expected to grow at 32% CAGR. Even with current profit margin of 18% the company's profits are likely to grow at more than 35% CAGR thus leading to EPS of appox Rs 120 by FY 2019-20. At current price of Rs 980 that translates in to forward PE of just 8.16 and trailing 12 months PE of 27.51 vs. market PE of 30.4. This is not giving the decent valuation of even the market PE to the stock price forget about commanding a significant premium due to its abnormal growth vis a vis the industry. To me stock looks extremely cheap and attractive.
Your comments are welcome :)
Link for the article:
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