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  • Writer's pictureShekhar Yadav

Marksans Pharma Ltd-Q1FY22 Analysis

Let me first brief you about the company. Marksans Pharma Ltd has a differentiated business model compared to other pharma companies. They acquire international companies(mostly in stress/losses) located in developed geographies into OTC & prescription drugs. Post which they transfer the manufacturing to India as well as introduce new products in the respective regulated markets.


For further details about the company, you can read my earlier blogs on the same:


Marksans Pharma Ltd- Q1FY22 Financial Analysis

I will talk about the financial performance of the company below:

Marksans Pharma Ltd- Q1FY22 Financial Analysis

The first quarter result of Financial Year(Q1FY22) saw a sharp drop in Gross margin of the company mainly on account of increase in raw material cost. On a quarter-on-quarter(QoQ) basis the material cost increased by a massive 8.1% whereas on a YoY basis the cost increase by 4.1%. The management alluded to the cost increase in APIs, Packaging material etc.

While the revenue grew by just 5.4% on a YoY basis, it has remained almost stagnant for the previous 5 quarters hovering around ₹350cr. Though, Mark Saldanha in the concall assured of the results to be better in Q2 and Q3FY22 result to be better than Q2FY22. The depreciation in the quarter increased to 7.5 cr from 1.33 cr in the previous quarter, implying that the company would have been adding some assets that will take care of the sluggish growth.

The company holds Cash & Cash equivalent of ₹225 as on 31st June 2021. That is from the regular course of business excluding the Orbimed investment amount

Order Book for the US Business is over $100Mn. And the company expects US to be their growth driver as they have filed for 2 ANDA which are complex molecules. Expect the approval by Q2FY22.


An interesting point that I got to know only in this quarter is that Softgel contributes just 25% of the total revenue of the company. In all its annual report, the company talks about just about its soft gel capabilities but never mentioned the percentage of revenue from softgel.

Geographic Contribution to Revenue

Pain management continues to be the key area of the business with a revenue share of 44% and has a basket of 30 products. Company is increasing focus on gastrointestinal segment.


Orbimed Investment:

Mark Saldanha, the MD remained tight-lipped about the investment by Orbimed in the concall. The investment amounting to ₹364cr is via the instrument "optionally convertible warrant". Marksans Pharma has already received 25% of the said amount and the remaining can be converted to equity shares in the next 18 months which is at the discretion of the investor. He just mentioned that the capital would be an enabler for the further growth of the company beyond ₹2000cr.

Also, they are expanding the current capacities and planning to backward integrate into APIs for their end products.


Capacity Expansion(CAPEX):

The company is expanding its capacity in its Goa plant from 2.4Bn units to 3.6bn units by end of FY22 i.e. by 50%.

Capex during the quarter was just ₹9.9cr.


Valuation of the company continues to be at a much lower level than peers.

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Aug 19, 2021

Wonder why the investment fromOrbimed by equity dilution. They have cash as well as no debt. Looks more like a signal to show 74 as the downside to the stock price.

Shekhar Yadav
Shekhar Yadav
Aug 20, 2021
Replying to

They did not clarify anything in the concall. Whenever asked, they said it will be used for their future growth beyond revenue of ₹2000cr

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