Abbott India – Messiah for the sloppy stock pickers
Pharma is very interesting sector where I believe the acceptance of “I am not a good stock picker” has helped me to generate above average returns.
Amongst all pharma companies, I believe Abbott India is the simplest business to understand especially for some one which focusses on 3-5 years earnings growth. Mid teen EPS growth with 100% ROIC, ever growing free cash flows year after year along with some certainty on the capital allocation make it more desirable portfolio candidate for me compared to capital intensive / lumpy CDMO businesses
The problem comes when I try to look beyond 5 years, disassociate myself from earnings growth and try to find “what” makes Abbott India’s franchise so strong to crunch cash conversion cycle from 44 days 10 years back to -25 days now. Failure to understand building blocks of the franchise make it difficult for me to assess its durability in future
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