Caplin Point Laboratories


(nitinver) #406

would have liked to see as to why Caplin is under scanner?? Sudden increase in recievables? Doubts over Latin America business and its solidity. On data sheet,past ten years performance is flawless but something is jarring.Does the market knows something that we don’t?


(EL) #407

Their annual report says “The entire Trade Receivables are good and have since been realized.

The have a large factory that has been funded from accruals without debt or equity. This factory recently got usfda approved. The management is keen to put this asset to use in the near future. As well as the last update of Chinese collaboration

I think Caplin is available at a good price at the moment

highlighted by me for emphasis


(nitinver) #408

Thanks.

So,in your opinion, why so much negativity for this company?Even as other pharna company have rallied ,it is more or less sideways.


(EL) #409

In my humble opinion, the market thinks none of the things that Caplin are working on are going to materialise in the short term

Over the short term markets can be very irrational

Also markets almost always rise on growing eps, and not in value based on dcf

No company can and should have a 20pc growth every year

Look at what had happened with Starbucks when they tried to grow too large too soon.

Personally I think Caplin might get more cheaper

My way of calculating is np/market capx100
Anything over 7-8pc is good to buy (if every thing else on balance sheet is good)


(Growth_without Debt) #410

If anyone attended AGM, please update their AGM note here


(Salman_kn99) #411

What is logic behind this formula?


(EL) #412

When buying shares you have to look as if you’re buying the whole company for reasons you should know. Using that assumption
Put bank and earn 6pc
Put in caplin earn 7pc
Look for skeleton in balance sheet, check if business is commodity
If all falls in line and 7pc has historically gotten better by 5-10-20p, what would you do
Keep in bank or caplin ?


(Salman_kn99) #413

Look at the last 2 years data (Cash Flow, Working Capital & Receivable). Sudden spike in these figure create suspicion.


(EL) #414

Yes you need to look at those
If you read a few posts on top, these points are covered already


(Salman_kn99) #415

Thanks. Actually this company falls under 24% profit for last 7 years in one of my screener but then i realized there is something wrong with figures such as CFO, WC & Debtors. Anyway thanks for your prompt reply.


(EL) #418

They also published balance sheet
The accounts receivable has not improved contrary to what the said in their annual report !

One thing investors don’t like in a bear market is a lie

They should have atleast explained why in spite of them saying it’s all paid, the accounts receivable went higher !

Big red flag - won’t go well in the market


(Ranjit Solkar) #419

Worked through a few numbers, the accounts receivable is around 87 days this time, and was at 85 days the last time they had declared. So, they haven’t “lied”, lets be careful while using these terms before going through the facts. If the AR from last results period weren’t received, their AR right now should be 150+ days, right?

In one of their clarifications to the media and also in their clarification letter to the SE, they have said they’re looking to retain AR within 90 days, which is industry average. Seems like despite an increase in sales by around 20%, the AR seems to be within 90 days. Personally feel the results are very good with good increases in all critical parameters such as Topline, EBIDTA, PAT and EPS. Hard to find companies with around 40% EBIDTA on a 600cr business.

On another note - pharma companies in general seem to be making a strong comeback. Always thought of Pharma, IT and Banks as safe havens, hoping for those good old days!


(EL) #420

Understood
But compare it with the one before last time and please also read the annual report on the subject
Use ctrl-f and search accounts receivable in their last annual report

I am invested at about 10pc of my portfolio and do believe in the management. I only said what the market will most likely do

I do intend to send them a mail asking why ar has not come down to historic percentage

Good opportunity to add lies ahead


(nerolu_praveen) #421

can’t agree more… my two cents…

It’s increasing evident that we tend to use very strong words (lied, cheated, fraud, siphoning-off, betrayed, criminals and blah blah blah) to put our perspectives on quarterly P&L statements, AR. While there may be genuine cases of lies, fabrication of P&L statements, mismatches. Social media might have had some impact on us while putting own our responses.

As a constructive forum, it would be more prudent if judgements are passed only after comprehensive analysis, having multiple facts (clarifications from managements/channel checks/con-call results/actions by gov-agencies/gross mismatches in the AR).

I may be wrong here. But it’s my opinion.

Note: 7% of my PF. Invested from 2014, added very little at 360 level in recent fall.


(Growth_without Debt) #422

Many have burn their capital in Vakrangee, 8K and PCJ by just looking at profit and revenue growth. How to identify red flag in Caplin Point? It is better to be wise than sorry!


(Ranjit Solkar) #423

That’s exactly what we’re trying to say. If you’re able to identify red flags, please do share with us. But until then, is the right approach to consider “guilty until proven innocent”? With the age of social media and the power to write anything without potential consequences for the person writing, I think its upto each boarder, especially well-learned and established ones like the ones on this forum to be a bit more responsible and back up statements with substantiated proof.

Anyway, thats only my opinion. You guys are much more experienced in this than me. Will always have respect for the work being done by the people of this forum! :slight_smile:


#424

Pathetic set of Q2 numbers on standalone basis sales growth is simply got added to cost of traded goods and net profit dipped. Although the consolidated EPS rose by 31% but sales growth at 18.75% is much lower than the historical averages. If they are not able to maintain sales growth despite moving in to new markets and products and other initiatives, I think it is time to hold back to your buying purse and wait for company to start delivering again.
As per my analysis it is now hold vs buy on dips previously.

Disc: Vested interest and biased views


#425

On receivable front, the company has been very open wrt the disclosures and they announced that Trade Receivables are likely to go down in 24 months… lets not jump the gun on that front but dip in growth rate is certainly worrisome coupled with entry in to China. Now they have three markets to focus, LatAM (Bread and butter), USA (Regulated market) and now China. Do they have bandwidth available to focus on all fronts at same time? I have my own set of doubts and investor conference is missing even post these results. Hope management improves the way they are making disclosures.

Disc: Vested interest and biased views


(EL) #426

India GDP is growing at 7-8pc
If Caplin can grow at 18pc and we are not happy someday it will have get bigger than all of India GDP

Secondly I think we shld always look at consolidated as we paid for consolidated business not standalone business. When i bought caplin I paid for consolidated business and thats what I am interested in and that what will continue to grow.
10-15% per annum is good growth


(Ranjit Solkar) #427

I dont understand this concept of Standalone vs Consolidated. Maybe some experienced boarders could throw light on it. My understanding of this company is that they dont have any domestic business, and they’ve always been a global (albeit small) player where they manufacture half of their exports in-house and outsource-manufacture half from China and sell them in Africa and Latin America. Also they have subsidiaries in the East and West now, so obviously the results have to be looked at from a consolidated angle right? Or am I not seeing it correctly? As Edward said - no one buys a company’s stock for their standalone business, right? And I know I’m not making apples to apples comparison - but maybe we should check some of the bigger guys such as Sun or Lupin’s Standalone vs Consolidated, and make a comparison to see where Caplin stands.

Growth trajectory-wise, I usually ask these questions:

  • How is their Cashflow?
  • How is their indebtedness?
  • How is their capacity to fund Capex/Opex, in continuation with the above 2 questions?
  • How is their EBIDTA/PBT/PAT levels compared to peers and compared to industry average?
  • Is their growth higher or lower than their peers and compared to industry average?

If I’m able to answer these questions, I’ll know if the results are pathetic or not :slight_smile: