Multibagger Small Cap Stock : Morepen Lab

Morepen Lab is small cap , rapidly growing diversified Pharma player.Company has 31 year of business presence in Pharm Industry.

Morepen business segment includes:

  • API: Manufacturer and Exporter of complex and high margins molecules (APIs/Intermediates) for regulated markets of USA, Europe, Russia, Canada and also for non-regulated markets
  • Domestic Formulations: Markets over 100 branded formulations in 8 major therapeutic segments
  • Diagnostics: Markets under its own brand name Clinical & Home Health devices and Blood Banking machines
  • OTC: Markets brands like Burnol ,Lemolate, Sat-Isabgol, Option -72, Head-X, Fever-X , C- Candy and others Over the Counter (OTC) products.

Morepen has 3 manufacturing facilities, located in the state of Himachal Pradesh. In last 5 year sales have registered a CAGR of 15% out of which API and OTC have recorded a CAGR of 16% while Diagnostics have out-shined with CAGR of 20% for last five fiscals FY13 to FY18. Company’s API Exports to over 75 countries.Morepen is World’s largest generic player of Loratadine (Anti-Allergy) with over 80% US generics market share.

Company is Largest generic player of Montelukast Sodium worldwide and Among the top players in production of drug Atorvastatin(Cholesterol reducer) with market size of US$18 bn. Recently got entry into Rs.2000 crore US market for Montelukast Sodium, an Asthma drug. Company had filed 54 International Patents with World Intellectual Property Office (WIPO) and other relevant country offices including India.

HOME HEALTH is company’s self-health diagnostic brand to cater untapped and growing market of  India for Diagnostics Products at home for day to day testing.

Current HomeHealth portfolio includes automatic Digital Blood Pressure Monitors, Digital and Analog Weighing Scales, Body & Foot Massagers, Heat Therapy Range, Nebulizers, Pregnancy Cards, Clinical & Digital Thermometers, etc. Morepen with a installed base of around 1.7 million Blood Glucose Monitors users and touching 2 Million by March’18. Company has company set up a sophisticated plant manufacturing Gluco Monitors in Baddi (HP) with capacity to produce 1.2 million meters per annum. All this products are available at online retail and Gluco Monitor  is one  the best seller product on Flipkart.

 

Company’s own Brand Dr. Morepen with a portfolio of 400 products in various therapeutic categories available at chemist shops against prescription. Dr. Morepen self health products includes Burnol (for burns and cuts), Lemolate Gold (for Cold Relief), Fibre-X Sat-Isabgol (Natural Laxative), Fever-X (Fever Reducer), Option72 (Emergency contraceptive), Dabgel (Antacid), MoreVital+ (Dietary Supplement), Exygra (Sildenafil Citrate), QuickChek (Pregnancy Card) and many more. Burnol has legacy of 70 years and is used in every household. Burnol is the “Original Burns Cream” and remains the market leader in the category. Lemolate is also a 40 year brand and has great recall in Eastern and Western India in the big cough & cold segment

This products marketed through a vast sales & marketing network to over 2 lakh retail outlets. Dr. Morepen has established itself a leading brand in OTC market of INR 20,000 cr in India.

In Q3FY18 Company’s Net Profit jump 107%. Blood Pressure Monitors’ and Blood Glucose Monitors’ sales jump up by a whopping 99 %and 61%respectively. In FY05 company has outstanding debt of INR 750 cr, from there company  has reduced debt each year and now expected to become debt free by June’18.

Stock Outlook:

  • M-cap: INR 1590 cr
  • CMP: 35.5  INR (10th  Apr 2018)
  • PE: 53
  • EPS: 0.66  INR
  • Book Value: 5.16 INR
  • Debt to Equity: 0.15
  • Share capital is 209.61 cr of FV 2.
  • Promoter Shareholding : 34.54%
  • FII/DII Share Holding: 18.3%

Company has Very strong R&D Chemistry & and robust product pipeline.Only company in India to start manufacturing of Glucometers It has Low customer acquisition cost due to high brand recall. People awareness about health and govt spending in health care give push to Company’s HomeHealth Products. After debt obligations are over and company would have free cash available for investing in working capital , which would give immediate boost to business.

With Small size m-cap and big opportunity in future, Morepen Lab is potential candidate for 10 Bagger in Next 5 years.

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Disclaimer: Please take advice of your financial advisor before any investment

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