March 01, 2016

Caplin Point: Management interview with Forbes Asia


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:
http://www.forbes.com/sites/anuraghunathan/2016/02/24/chennai-pharma-entrepreneur-braved-odds-to-sell-meds-in-latin-america/

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Any information discussed on the blog is for information purpose  only. People are themselves responsible for any profit/loss arising on trading on such information.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I have the stock in my portfolio/trading position and hence my point of view will be biased. Readers should consult their financial advisory before any investments.

Warning: Stock trading is high risk activity and can lead to loss of up to 100% of invested capital.

NSE Update: 29 Feb 2016


I could not have missed posting for this day as it is once in 4 years opportunity :). Markets today tested the previous 52w low of 6869 and slide further to 6825. On both occasions the nifty got support at lower level and markets closed above 6960 levels. This for me is double bottom or triple bottom if we take 6961 made on 25 Feb 2016 in to consideration.

Are we poised for a rally, may be a short one to test the first resistance of 7242. Remember last time it did not cross that level, falling short of just couple of points.

I continue with my opinion that markets won't rally in a hurry but now can start consolidating. I continue to buy stocks of my choice and will recommend you all to do the same.

Support: 6861
Resistance: 7242, 7419,7540,7640, 7725, 7935

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Any information discussed on the blog is for information purpose  only. People are themselves responsible for any profit/loss arising on trading on such information.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I have the stock in my portfolio/trading position and hence my point of view will be biased. Readers should consult their financial advisory before any investments.

Warning: Stock trading is high risk activity and can lead to loss of up to 100% of invested capital.

February 23, 2016

NSE Update: 22 Feb 2016



In my last post dated 20 Jan 2016, I shared the weekly charts with you all. Today is the daily chart. 

Support: 6861
Resistance: 7242, 7419,7540,7640, 7725, 7935

Last one month had been very volatile. The indices are playing with the emotions, my for sure :) It continue to respect the support levels and resistance levels. I don't foresee markets reaching new highs in the near future but this is the best time to take a buying dip. If you are afraid of volatility be more afraid of falling debt returns and its impact on your long-term goals.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Any information discussed on the blog is for information purpose  only. People are themselves responsible for any profit/loss arising on trading on such information.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I have the stock in my portfolio/trading position and hence my point of view will be biased. Readers should consult their financial advisory before any investments.

Warning: Stock trading is high risk activity and can lead to loss of up to 100% of invested capital.

February 07, 2016

Caplin Point: Result update Dec 15




Result update for Caplin Point for Dec 15 (Standalone)

Highlights:

YoY:
Revenue up 34.3% (YoY)
Operating profit (PBDT) up 79.03% (YoY)
Net profit/EPS up 75.3% (YoY)

QoQ
Revenue up 2.2% (QoQ)
Operating profit (PBDT) up 9% (QoQ)
Net profit/EPS up 12.5% (QoQ)

Change in shareholding pattern:

YoY: Over all FII holding up 1233% from 0.3% of the equity to 4.0% of the equity.

QoQ: Over all FII holding up 25% from 3.2% of the equity to 4.0% of the equity.

The company is consistently beating its guidance of 25% of top line and bottom line growth.

Last 12 months eps is Rs 35.38 and current market price of Rs1194 leading to PE of 33.75. This is inline with the industry PE of 33.1

Maiden interim dividend of Rs 2.5 per share. Record date: 15th Feb 2016

My View:
The results of the company were better than the management guidance of 25% topline and bottom line growth. The results would have been impacted by rains in TN & Pondicherry but no disclosure from the management on that. So, I assume their was no impact.

Problem in global currency market: Most of the sales of the company is in Africa and Latin America, which is badly impacted by the current currency turmoil. Despite this, the company was not only able to post healthy growth in sales and net profit but was also successful in improving the operating and net profit margins by 170 bps and 140 bps, respectively.

Shareholders friendly management: We all need to agree that disclosures of small cap companies are not great and this company is not an exception. Given no response on my mail seeking information on impact of TN floods. On contrary the company has been a dividend payer since 2011 and that is increasing every year. In fact this time the company is paying an interim dividend Rs 2.5 per share. As famous people say dividend cannot be paid out of thin air, so company is making money.

Wishlist:
1. Stated dividend payout policy by the company. It will be even better if they start declaring quarterly dividend.

2. Sub-division of shares: The liquidity of the company shares is quite low. They have taken steps like listing on NSE to improve the liquidity but given high promoter share of ~68% and FII's owning another 4% and company being a small cap. They can improve the liquidity by sub-dividing share in Rs5, Rs 2 or Re 1 paid up.

3. More disclosures: Obviously, the best the company can do is to start improving on its disclosures. Like impact  of TN floods on sales and profit or revenues/margins from ANDA agreements and agreements alike.

Stock rating: Accumulate
The company is growing better than the market average. It deserves a premium PE and not just the normal PE. The PE of the company is down from peak of 57 hit last year to current 34. Better disclosures can help company command a premium over the peers. In the process helping the shareholders make money from the stock market. I expect the company to continue making new highs in the medium term if not immediate future. 


The above is not a research report but information as available on public domain and it should not be treated as a research report. Any information discussed on the blog is for information purpose only. People are themselves responsible for any profit/loss arising on trading on such information.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I have the stock in my portfolio/trading position and hence my point of view will be biased. Readers should consult their financial advisory before any investments.

Warning: Stock trading is high risk activity and can lead to loss of up to 100% of invested capital.

January 21, 2016

NSE NIFTY Update: 20 Jan 2016


In my last post dated 17 Jan 2016, I shared the monthly charts with you all. Today is the weekly chart. The good news is we are having a free falls as indicated by the charts.

Support: 7242, 6861
Resistance: 7419,7540,7640, 7725, 7935

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Any information discussed on the blog is for information purpose  only. People are themselves responsible for any profit/loss arising on trading on such information.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I have the stock in my portfolio/trading position and hence my point of view will be biased. Readers should consult their financial advisory before any investments.

Warning: Stock trading is high risk activity and can lead to loss of up to 100% of invested capital.

January 17, 2016

NSE NIFTY Update: 17 Jan 2016


In my last post dated 12 Jan 2016, I shared the weekly charts with you all. Today is the monthly chart. The bad news is we have broken the support levels on monthly charts. So, don't expect an immediate reversal or heavy upside movement in some time to come.

Time to start accumulating your favorite stocks via SIP's and lump sum purchases. The bad time brings the best bargains. If you don't have a 10 years investment view on stock market stick with small saving instruments.

Should we try to get in the game of predicting markets. I don't think so.

Support: 7419

Resistance: 7540,7640, 7725, 7935

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Any information discussed on the blog is for information purpose  only. People are themselves responsible for any profit/loss arising on trading on such information.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I have the stock in my portfolio/trading position and hence my point of view will be biased. Readers should consult their financial advisory before any investments.

Warning: Stock trading is high risk activity and can lead to loss of up to 100% of invested capital.

January 12, 2016

NSE Nifty 12 Jan 2016 Update


This is the weekly chart of NSE Nifty

Although, the support levels given below belongs to daily chart. My weekly chart says its already a break down.

Can wait another week for trying to forecast the lower target levels.

The nifty broke the level of 7540 today and testing the water of 7500.

Support: 7419

Resistance: 7540,7640, 7725, 7935

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Any information discussed on the blog is for information purpose only. People are themselves responsible for any profit/loss arising on trading on such information.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I have the stock in my portfolio/trading position and hence my point of view will be biased. Readers should consult their financial advisory before any investments.

Warning: Stock trading is high risk activity and can lead to loss of up to 100% of invested capital.