Caplin Point has entered a consolidation phase, stock-price wise and business-momentum wise. The stock has returned 80-90 per cent from our first accumulate call in July 2022 to April 2024 and again delivered similar returns from April 2024 to January 2025. We recommended investors hold the stock and not add new positions in January 2025 and the stock has declined 28 per cent in the period. The hold call was based on valuations, reaching 32 times one-year forward earnings at the time. But with valuations now receding to five-year average levels of 19 times one-year forward earnings, we now recommend investors accumulate the stock.

Caplin Point manufactures generic medicines primarily aimed at Latin American markets and also the US markets. In the last one year, the sales growth of 11 per cent year on year has failed to enthuse investors who expect high growth from the company, even as PAT growth stands at 20 per cent year on year. In the consolidation phase, the company is, conservatively, gearing up for the next phase of growth; Chile, Mexico markets in Latin America (Latam), Oncology portfolio launches, and expansion of its US label portfolio. The company is likely to sustain modest growth metrics and position itself for strong growth phase to resume from FY28.

Latin America

Latam accounted for 75 per cent of LTM (last twelve months) revenue, which includes Guatemala, El Salvador, Honduras, Nicaragua and a minor portion from Africa. The company business model involves last-mile presence in these markets, including its own warehouses and distributor network reaching out to pharmacists, doctors and stockists in these regions. On the supply side, the company manufactures 60 per cent in-house and sources 40 per cent from outsourcing to China and India.

Growth has moderated in these regions with 8 per cent year-on-year growth in LTM as the smaller markets face saturation. Mexico and Chile are the next larger markets for the company. But these markets have a long gestation period and are predominantly a government tender market which prioritises local sourcing. The company now has its own warehouse in Chile and 125 product licences. The company is also eyeing a ₹150-crore capex to develop a manufacturing facility in Mexico along with building a portfolio of 80 filings (35 have been filed). With a mix of private and tender market rollout for its pipeline of approved and in-process products from its facilities, the larger markets should drive significant growth from FY28, as per the company.

US markets

The company secured 27 US FDA approvals from FY24 to now. This has supported 21 per cent year-on-year growth LTM.  The segment accounted for 25 per cent of revenue in LTM. All of the approvals are in the sterile space – solutions, injectables, emulsions and ophthalmic. This includes approval for complex suspension injectable recently (methylprednisolone – an anti-inflammatory). This allows lower price erosion and lower generic competition compared to oral solid dosage generics. The segment has reported a strong PBT margin of 12 per cent in LTM (and around 10 per cent PAT margin), even as the investment is underutilised (R&D cost, pending launches and its own front-end for sales). While the company relied on licensing in earlier periods, Caplin has developed its own sales front-end in the US and derives 75 per cent of the US revenues from the same, which has aided the margins.

The company currently has 55 ANDAs (generic application to US FDA) and has acquired four ANDAs with five more in prospects to supplement its pipeline. It should secure continued strong growth in the space owing to small base and strong pipeline in sterile space.

Capital expansion

Caplin is investing ₹1,000 crore, of which close to half has been deployed. The existing sterile facilities have been expanded, API (Active Pharma Ingredients) plant upgraded, and oncology formulation plant added. In FY27-28, the company is expected to commercialise three more facilities. An oncology API plant, an oral solid dosages plant and a new sterile facility across Chennai. These facilities will serve both Latam and US markets on commercialisation. Oncology API is to backward integrate with the formulation’s portfolio. The capex plan should enhance the existing (oral solids), the consolidating (US steriles) and the upcoming foray (oncology products).

Regulatory approvals for the new plants and product filing that will follow will ensure growth but only from FY28 for Caplin Point. The company should deliver industry-level revenue growth of 11-12 per cent year on year, primarily supported by US expansion in the next two years. Caplin has a strong margin profile with gross and EBITDA margins of 60 per cent/35 per cent in the LTM, which have expanded and are expected to continue at the same level along with 11 per cent sales growth in the period. The company is well funded to execute capacity expansion with no debt and cash equivalents of ₹1,300 crore in December 2025. It may consider acquisition in US markets (ANDAs or formulations) with the cash reserves in addition to the capex.

Published on April 11, 2026