Fantastic observations again from you Krishnaraj. Followed up by that excellent Summary paragraph.
I have only 3 things to add:
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Obviously newcomers to Shilpa Story have to be cautious. Unless you have a long horizon, do not BUY Shilpa. The company to its credit has always maintained that they will have flattish growths - all that they are doing today and tomorrow, is a build-up to FY17 and beyond.
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Those who want to STUDY Shilpa must pay heed not only to the BS & PL, but try to get a feel of what FY17 and beyond holds. For that a study of Shilpa’s Pipeline for the next 5 years is extremely important - also the past 5 yrs pipeline success is an invaluable exercise. Do we all know that Shilpa sometimes gets an astonishing 50% of the total market for a molecule. Can they do it again? This (past and present pipeline) is all available in public domain by the way. We hope some young turks at VP will take the bait and do some work on that front - to try and UNDERSTAND what the Market may be knowing (and factoring in?) more than what is apparent in the Shilpa Story.
@ananth - Please wait for 2 weeks - for some folks at VP to put their hands up for this exercise… You may then like to share your ground-breaking work on Shilpa Pipeline that you had produced before Shilpa’s last AGM? Thanks.
3.Finally, for those who like to buy long-term, an understanding of the DNA of the company and the basic Business Model it pursues is more important than everything else. That will give you the conviction to HOLD through flattish times - instead of selling out after making a 2x or 3x in last 1 to 2 years,
Shilpa Medicare, in a sense is like PI Industries. Those who have seen Mr Singhal’s fabulous interview on You Tube might recall what he said of PI’s CSM Business Model. He said something on the lines of - Ours is a unique model. We first need to invest for 5 years, and then after 5 years the returns are almost Vertical. It works out the same as a linear 25% grower every year. With a difference - after those 5 years - nobody will be near us. We believe in taking those kind of Risks to build a uniquey differentiated business model.
If you study Shilpa’s trajectory - there is a similar story - they will invest heavily for 2-3 years, and consolidate during that period. Post that consolidation there is a huge rise. We long-termers in the Shilpa Story believe a similar exercise is on the way currently - with 2 key differences. a) they have moved up the value chain from API to Formulations (not to be ignored) b) There are multiple “Optionalities” that could play out in the next 2-3 years creating a Disproportionate future.
They might or might not create that disproportionate future (Refer our Business Quality Insights PDF), but it stands to reason some of that extraordinary valuation being accorded to Shilpa Medicare - might also be factoring these things in? Shilpa is no more an unknown - fairly big Institutions (both buy and sell side) are party to the story.
Disc: Invested in Shilpa from more than 2 years. It is one of the higher allocations in my Portfolio. My last purchase was more than 6 months back. My views should be taken as being positively biased.