Buy Caplin Point Labs; target Rs 76: Firstcall Research

Firstcall Research is bullish on Caplin Point Laboratories and has recommended buy rating on the stock with a target price of Rs 76 in its March 15, 2013 research report.

"Caplin Point Laboratories manufactures a wide range of Ointments, Creams and other External application preparations in addition to the regular segments of pharmaceutical formulations. The company’s net sales registered an 8.05% increase and stood at a record Rs. 293.32 million from Rs. 271.47 million over the corresponding quarter last year. The company’s net profit registered a 75.37% increase and stood at a record Rs. 35.81 million from Rs. 20.42 million over the corresponding quarter last year. Caplin Point has over 1500 products registered in various countries and further registrations are on the way. The ERP implementation covering all the processes in all locations are in the final stages and is hoped that this will go live from January 2013. Caplin Point will be starting up operations in the fully regulated markets of Europe, USA, Mexico and Brazil in mid-2013. Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 25% over 2011 to 2014E respectively.

The company’s net profit jumps to Rs.35.81 million against Rs.20.42 million in the corresponding quarter ending of previous year, an increase of 75.37%. Revenue for the quarter rose 8.05% to Rs.293.32 million from Rs.271.47 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.3.62 a share during the quarter, registering 75.37% increase over previous year period. Profit before interest, depreciation and tax is Rs.59.19 millions as against Rs.32.15 millions in the corresponding period of the previous year.

Outlook and Conclusion: At the current market price of Rs.68.00, the stock P/E ratio is at 9.87 x FY13E and 8.17 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.6.89 and Rs.8.32 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 25% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 6.40 x for FY13E and 5.40 x for FY14E. Price to Book Value of the stock is expected to be at 2.31 x and 1.80 x respectively for FY13E and FY14E. We recommend buy in this particular scrip with a target price of Rs 76 for medium to long term investment," says Firstcall Research report.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More