True, it has been a consistent compounder. Hopefully in the coming years as they enter bigger Latin American companies like Brazil and Mexico, they should benefit from from their differentiated model. Also the presence of the Caplin Steriles would continue to increase in the US (with more complex molecules), which is an additional lever of growth. Once it reaches the maturity, I won’t be surprised if it manages to outgrow the parent company. In the coming quarters the API plant coming online should would boost their backward integration.
Having said that, the red sea crisis has resulted in increased freight costs and it will be interesting to see how it impacts the quarterly results in the near term. They managed it pretty well at the peak of covid, when there were freight shortages, but the red sea crisis will remain an overhang in the near term. The management had mentioned in the concall that this wouldn’t impact their business, but from the reports looks like the freight rates have increased by many folds since mid of Dec, when the red sea crisis started unfolding.
| Subscribe To Our Free Newsletter |
