Recommendation from Healthcare Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year.[EasyDNNnews:PaidContentStart]

Caplin Point Laboratories Ltd.: PHARMA COMPANY EXPANDING GROWTH ENGINES

HERE IS WHY
✓  Strong Presence Across Markets
✓  Debt-Free Balance Sheet
✓  Strong Self-Funded Capex Pipeline

According to Mordor Intelligence, the Indian pharmaceutical market stood at USD 57.61 billion in 2025, is estimated at USD 60.32 billion in 2026, and is expected to grow to USD 79.74 billion by 2031, at a CAGR of 5.74 per cent. Within the industry, injectable drugs, oncology products, and complex formulations are among the fastest-growing segments globally due to increasing demand for specialised therapies and stringent regulatory requirements. Considering these factors, we recommend Caplin Point Laboratories as our Choice Scrip.

Caplin Point Laboratories is a pharmaceutical company engaged in the development, manufacturing, marketing, and export of generic formulations, branded generics, injectable products, and speciality pharmaceuticals. Over the years, the company has evolved from a contract manufacturer into a diversified pharmaceutical player with a presence across Latin America, Africa, and regulated markets such as the United States, Canada, Australia, and Europe. The company has over 5,000 product registrations, 650-plus pharmaceutical formulations, and a portfolio spanning 36 therapeutic segments. The company currently derives around 76 per cent of its revenue from Latin America, 21 per cent from the United States, and the remaining 3 per cent from Africa. Mexico remains a major growth opportunity, where Caplin has already secured approvals for 25 products and maintains a pipeline of over 120 products expected to be filed over the next 18–24 months. Chile is also emerging as an important market, with the company holding over 135 product licences and multiple tender wins.

For FY26, Caplin reported revenue from operations of ₹2,187 crore, registering a growth of 12.9 per cent over FY25. EBITDA increased 17.9 per cent to ₹876 crore, while PAT rose 20.1 per cent to ₹650 crore. In Q4 FY26, revenue stood at ₹600 crore, up 19.4 per cent YoY, while EBITDA increased 20 per cent to ₹233 crore and PAT grew 19 per cent to ₹173 crore. During FY26, the company received 10 ANDA approvals and acquired 15 additional ANDAs, taking its total ANDA portfolio to nearly 60 products. It has also filed 54 products across multiple regulated markets, including Canada, Europe, Australia, Brazil, South Africa, and the Middle East. Management expects these markets to begin contributing meaningful revenues from FY27 onwards. The company is also expanding into complex product categories such as pre-filled syringes, ophthalmics, oncology injectables, IV bags, and Blow-Fill-Seal technologies, which typically command higher margins and face lower competitive intensity.

The company is investing aggressively to support its next phase of growth, with an identified capex pipeline of nearly ₹1,000 crore. Management indicated that around ₹490 crore has already been deployed, while the remaining ₹510 crore is expected to be spent over the next 18–24 months. The planned investments are focused on injectables, oncology, APIs, and manufacturing expansion. On the financial front, the company is virtually debt-free. The company also maintains liquid assets of ₹2,726 crore and free cash reserves of ₹1,471 crore, providing significant flexibility for future investments, acquisitions, and product development initiatives.

On the valuation front, the stock is trading at a PE of 28.2x, which is below the industry average of 31.7x, though slightly above its three-year median PE of 25.2x. Over the last three years, the company has delivered a sales CAGR of 14.2 per cent and profit CAGR of 19.6 per cent, while maintaining healthy return ratios with ROCE of 24.6 per cent and ROE of 20.6 per cent. Hence, we recommend a BUY.

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