Here are the expectations from company’s management (Q1FY22 Concall):
~2x the business in 5 years at improved margins
Exports is the highest margin business ~margin wise Exports (+4-5%) > Trade Gens (5-7%) > CDMO. For CDMO they mostly work on formulations for MNCs which is eventually sold under MNC brand name. Are CDMO businesses meant to be a 10% OPM game? Possibly lower because they don’t add much value and serve as a low cost mfg resource for the big guys (unlike say Syngene, Laurus, etc).
Keeping current PE in mind, a possibility of a future re-rating cannot be ruled out (if nothing goes too wrong). If they are successful in doubling the revenues in 5 years and PE rationalizes to ~20, ROI could be around 3-3.5x - the risk-reward scenario needs a closer look to weed out any reg flags.
Exploring.