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.
