humnn… so you have almost touched the Achilles heel for many of the long term AP investors, at least I am going through some thoughts specifically around this. So, here is my take:
- Very true. the growth “rate” has slowed down. To help see the directional drift, here is a quick summary:
It surely will help to understand each of the moving variables separately - and importantly in respective context - to understand predominant concerns. My reading of this is:
Domestic business slowing down from comparative high growth era of 2012 -15. However, is still maintaining health growth rate wiz a wiz IPM (indian pharma market growth) as reported by IMS. Within domestic, Cardio as a segment is still maintaining >35% growth for past 5 years (except for this year where its 25%).
Africa Malaria tender: comparative slowdown however still managed a 28% YoY growth FY17. Can be under pressure going forward though on account of lower expenditure projection.
Asia - Truly a concern.
US Export: Unfolding well. High growth rate, partially due to low base effect. Not much of foreseeable roadblock at this moment. In totality, they have decent ANDA pipelines of 15 under review and recently FDA approved Dahej plant. As said somewhere in earlier post, they can do anything between average/ good/great here.
Another critical and equally important aspect is about profitability. What is re-affirming my faith in AP is that this is STILL able to increase the margin % despite all those top line stagnation.
In summary, I share the apprehension that in few pockets the growth is slowing down (comparative for past years, not necessarily from industry peers), and causing some uncertainty. However, some of the other fundamental tenets - visibility, management foresight, ability to execute, compliance etc. - has not changed yet for AP.
Therefore, personally I may want to give this story some more time/quarters (of course, under little extra monitoring). Looking back this may appear to be a transitory journey.
On a lighter note: even otherwise, at this stage I dont have any stock name to replace AP with. Please help, if you have something.
Disc: Invested since long. I am in a watchful state, as indicated above.