@faheem
It was great to know that your family (and now you) hold Cipla shares for very long period (probably since inception of the company). It was just concidence that yesterday I completed my working on Calculating return to sharheolder (assuming an investor hold shares since IPO without subscribing in any rights/preference issue and also not selling any share since listing). As per my calculation, Cipla over 37 years (Listed on BSE from July 1983, your family return may be different as you hold share before listing in my understanding. The company took very long time to get listed although started operaton in 1935 while got listed in 1983, nearly 48 years from inception on BSE).
If my understanding and calculation are correct, the IPO shareholder (holding orignial share without any cash outflow for rights/convertible debenture etc and also not selling any single share), would have generated XIRR of 56.8% over period of 37 years !!!.
During past 35 years (FY1983 Oct end to FY2019 March end) net profit for the company compouned at CAGR of 25.73% p.a.
Normally, shareholder return are related to net profit growth. However, in case of Cipla, the company was traded at extreme low valuation at time of listing. In year ending 31Oct1983, EPS was around Rs 133 per share while share price as on 14Dec1984 was around 140, giving PE of only around 1 times !!! In fact, the price of Rs 140 I got from price list of 21Dec1984 which stated last trading date being 14Dec1984. As on 31Dec2019, the company trade at PE of around 25 times (FY19 EPS Rs 18.96 as per my working).
So singificant return generated by shareholder are due to PE expansion from 1 times to 25 times over years. In my limited working on Indian market past return, this is the highest return I have seen for the companies over three decades. Return generated by Cipla is amazing !!!
If life would be simple and past was indication of future, probably Cipla is best investment. However, with current PE of 25 times and kind of maturity Cipla has achieved, I would suspect that Cipla would again generate upwards of 50% CAGR in next 35 years. However, one can expect return in line with market. It would be difficult to estimate future return. Also, One need to appreciate Mr Hamid for creating such a wonderful business enterprise. While he is trying to hand over management control to professional team, only time would give answer whether the new management can match the legacy of Mr. Hamid.
I neither recommend you to hold/sell the investment in Cipla.I am not SEBI registered advisor. Only thing I can tell (knowingly/unknowingly) your family has invested in the company which has generated among the best return for shareholders in Bombay stock exchange since listing (period more than 30 years). It is simple to have average of more than 100 years in 10 test, but very difficult to have average more than 50 in 250 test. We can say similar for Cipla past return.
I am enclosing my working file for your reference. Refer to cell AC43 for XIRR in Cipla since listing and cell AW43 for net profit CAGR.
Discl: My working may be wrong. Not a SEBI registered advisor, Not recommeding investment, No holding.
Cipla Past Return.xlsx (52.6 KB)