Caplin Point Laboratories


(Rohit) #364

Than why this aberration in this year only. In this year only such a high rise in receivables is seen. If you see debtors days for last 5 years its around avg 20-30 days ,than sudden rise to 86 days. The scenario which you are saying should be applicable in previous years also…right ?


(Multiplier777) #365

rvetri

It is good to analyze threadbare of what is happening on the balance sheet. Will give us more clarity on how the business has done in FY2018.

Net fixed assets (including wip) is up Rs 29 cr
Inventory is up Rs 6 cr
Receivables are up Rs 93 cr

Despite the sharp increase in receivables, total liquid cash is up Rs 14 cr
(investments up Rs 28 cr, cash up Rs 19 cr and bank balance down Rs 33 cr).

The above is without taking any debt (remains a nil debt company & paid Rs 40 cr as tax).

The surprise in the pack remains their injectables business where they have invested a lot of money, got USFDA plant inspection approval but not yet started sales to the US. Remember, this plant has been set up without taking any debt. Incidentally, they are setting up another injectable plant for non regulated markets, again without taking on any debt.

Lets see how this story unfolds. In the last management calls a few months back (Nov 2017), they guided for 20% -25% pat growth in bottom line. They have done 51% pat growth this year. I do like companies who under promise and over achieve (they could well have guided a 50% growth but stuck to their 20%-25% growth guidance). Leaving aside growth analysis quarter se quarter tak, 20% annual growth should be possible.

Incidentally, in the management call attached, they did mention about receivables cycle going up as they are getting into OTC products, soft gel and wellness categories where the receivables are higher but margins are better. This is actually borne out by the fact that ebitda margins are up from 32% last year to 37% this year.


(Rohit) #366

What is the % of OTC products (which are responsible for higher sales) to current year sales ? any idea ?
The receivables are approx 20% of revenue , so OTC sales should be in line with it. please correct me if I am wrong.


(Multiplier777) #367

Don’t have the details of OTC products. Someone with access to management can get this from them.

Incidentally, someone who is a pharma expert (I am not!) can throw more light on their injectables facility and its real value. Claris had recently sold their injectable facility to Baxter for USD 625 mln in July 2017. Claris was of course already supplying injectables to the US while Caplin has yet to start exporting (ANDA’s filing going on). The capacity of Claris’s plant is also likely to be much higher (I don’t have details) though Caplin in its press release for March 2018 results has talked about raising capacity to 60 mln units. Claris’s sales during FY2017 were Rs 812 cr while they sold the business to Baxter for Rs 3400 cr - taking USD/INR at Rs 55. Still 4x sales. Claris Baxter Injectibles plant sale July 2017.pdf (491.3 KB)

Caplin’s board had met on March 1, 2018 to discuss getting a potential partner for their injectables business. News partnership for IV Fluids business 2 March 2018.pdf (73.0 KB)

Caplin seems to be spending around Rs 60 crore p.a.(yes, this large an amount) to maintain the injectable facility as per USFDA compliance requirement (see page 13 of 2016-17 balance sheet). Claris’ 2017 balance sheet (page 52) also lists the key challenge being to maintain the manufacturing facility as USFDA compliant.

I feel the key for Caplin seems to be to accelerate its sales of injectables to the US market (get a strategic partner or even give majority/sell the business to an MNC).

As I am not a pharma expert, maybe someone else can throw better light on my comments.


(prajish) #368

Any thoughts on the Clinical Research Organisation (CRO) plan? Is it capital intensive, interested in understanding it’s contribution to the business.


(Multiplier777) #369

CRO is a service business where they provide clinical trials for new drugs being developed by MNC innovators. It is low capital intensive and Vimta Labs had started out a CRO with a lot of promise. But their business did not grow into a large one. It is generally a very high margin business, being a service business.

Someone more knowledgeable can provide better details.


(Mukesh Tolani) #370

@Multiplier777 : I have been following Caplin since a couple of years now. I have a small initial position. But could not add substantially to it., as I could not gather the required conviction for the same.
There is a strong need for transparency in providing details of product pipeline to shareholders., rather than rough segmentation.
In many other listed pharma companies., product pipeline & their individual contribution to revenue is quite visible.


(Rohit) #371

Hi Mukesh , any views on high increase in trade receivables ?


(Rohit) #373

Thanks. Due to sudden high increase in receivables , I have trimmed my holdings. Will wait for upcoming quarters. Do you attend the conf call for Caplin ? If you do , kindly raise this question to management , the reason for high increase.


(Growth_without Debt) #374

Yes…looks progress on Injectable plant is real!
Injectable Production Chemist /asst. Manager / Manager for Pondicherry …
https://www.naukri.com › job-listings-Inj…


(Rohit) #375

when is the conf call ? is thier any update


(Growth_without Debt) #376

Exact reverse market mood…Q42017 and Q42018


(Abhishek Jain) #377

i heard conf call is on 11th…so there will be uncertainity till that.I am sure its negative mkt sentiment, nothing else.Mgmt is quality …feel good time to buy at 440 levels


(Subbu) #378

hi there,

Can you give me the con call details please?
Although one quarter’s earnings could be a blip Im a bit concerned about management’s penchant for risk taking. They seem to be quite aggressive and not sure if its going to pay off.


([email protected]) #379

They don’t conduct concall.


(prajish) #380

Recent announcement with regards to concerns over receivables 4fd9800a-259f-4d1b-bf9b-ce45dc749fd4.pdf (1017.7 KB)


(Subbu) #381

thanks. apart from the receivables the main issue is regarding the margins right? they have been coming down of late. any ideas why?


(Subbu) #382

Hi everybody.

I have a short 15 min call with management mainly to understand margins as receivabkes story is pretty clear now. So would be able to address a few qns from the community. Pls post your qns and ill revert back after the call. Thanks


(Growth_without Debt) #383

Can you please clarify and post your discussion had with promoters


(Rohit) #384

I can not see any conf call details on bse website. Are you sure its on 11th june