MOREPEN LABORATORIES MULTIBAGGER POTENTIAL STOCK D12M08Y2014

Morepen Laboratories is a 25 year old company. The company's business comprises of Formulations (over 100 branded formulations in 8 major therapeutic segments), API (API's and intermediates for both regulated and non-regulated markets), Diagnostics (blood banking machines, clinical and home health devices) and OTC; some of the OTC brands include Burnol, Lemolate, Sat-isabgol, Head-X, Fever-X and others.   

The company has 3 manufacturing facilities with international standings for API, Formulations and OTC. They are located in the foothills of Himalayas in the state of Himachal pradesh. For more info check, http://www.morepen.com          

PRESENT DAY NUMBERS  
CMP on Day12 Aug2014: Rs 5          Market cap: 205 crores          BV: 4.5            FV: 2           
Revenue FY14: 352 cr (FY12 318 cr)      Net profit(loss): FY14 (2.7 cr) [FY12 (20.5 cr)]
Debt: 85 cr (approx) 

BRIEF HISTORY  
Morepen started in 1985 as a pure API (active pharmaceutical ingredient) business. They then moved up the value chain to complex multi-stage synthesis and further progressed into high value molecules. The company built world class manufacturing facilities and got them approved in accordance with USFDA standards in the year 1999. 

MULTIBAGGER POTENTIAL  
1. After continuous Q-o-Q losses, for the first time since 12 quarters the company has made a quarterly net profit of approx 1 crore in Q1 FY15
2. Debts have reduced consistently from high of around 800 crores (in 2006) to less than 100 crore currently.
3. From a low of 115 cr annual revenue in FY 2006; the revenues have steadily increased to 352 cr in FY 2014   

INTERESTING INFO   
1. Morepen facilities/plants are situated in one of the most scenic, beautiful and serene surroundings on the foothills of Himalayas
2. Loratadine has been a major source for the API business. Other contributors are Montelukast, Atorvastatin, Sultamicillin, etc
3. In OTC product catrgory, 'Dr Morepen' is a well established and positioned brand. The range of products are Isabgol, C-Sip, Burnol, Lemolate, etc  

MY TAKE  
Morepen laboratories is a major turn-around story. This company got a fresh lease of life; courtesy CDR in the year 2006. The company was one of the early entrants into the pharma business. Despite having a good business plan, good set of products, early establishment of various brands; the company lost its way some time around the years of 2002-04. Everything that could go wrong, went wrong for them. The situation of the company went from bad to worse to dire.The stock price collapsed from a high of 1200 rs (FV 10) and went downhill for almost a decade to a low of 2 rs (FV 2).     

Then the turnaround started. The company went for a CDR. The Debt Restructuring Scheme was approved by the CDR cell in June 2006. Since the CDR commencement and progress in the year 2007; the company has painstakingly undertaken several steps in the right direction. In a slow and steady journey, the recovery and revival of the company appears to be taking place in a sustained manner. The worst seems to be over. The future looks to be bright and vibrant for the company. It has all the ingredients and traits to make a successful and profitable pharma company.   

Hence a potential multibagger!!      

Disclosure: I own shares in Morepen labs (and will continue to add/accumulate more)