February 2024

SINCE 1986

BSE Code : 524404

The Trick Is To Time Duration : 1 year

Spot Them At The CMP : `157.95 (as on 22 February, 2024)

Larval Stage Target Price : `206

MARKSANS PHARMA LTD.

A Profit-Generating Pill
Company profile
Marksans Pharma is a global pharmaceutical company special-
ising in Active Pharmaceuticals Ingredients (APIs), formulations,
and biopharmaceuticals. It offers contract research and manu-
facturing services (CRAMS) to global pharmaceutical companies
and has plants built according to US FDA guidelines. Marksans
Pharma exports its products to markets in Europe, Latin Ameri-
ca, Africa, and Oceania.
The company’s R&D centre is located in Goa, and it has manu-
facturing facilities in Goa and the UK. Marksans Pharma has alli-
ances with the top 8 MNC generic companies for contract man-
ufacturing and licensing agreements for product development
and supply.
Product Wise Break-Up
n Marksans Pharma has a distinct focus on addressing pain,
with pain management products dominating their portfo-
lio at 44 per cent. This suggests an expertise in this critical
area.
n The next largest segments, cough & colds (14 per cent) and
cardiovascular system (CVS) (9.2 per cent), reflect a com-
mitment to both common ailments and chronic health
management.
n Gastrointestinal offerings (8.5 per cent) further diversify
their presence, while the remaining 14.6 per cent likely
encompasses a range of additional therapeutic areas, pro-
viding growth potential.
Location Wise Break-Up
n A geographical breakdown of Marksans Pharma’s revenue
reveals a clear focus on developed markets, with North
America taking the top spot at a commanding 43.9 per
cent. This signifies a strong presence in the vast and lu-
crative US market, likely fuelled by their targeted product
launches and strategic acquisitions.
Close behind is Europe with a significant 42.8 per cent
n
share, highlighting their established operations and po-
tential for further expansion within the diverse European
markets.
n Australia holds a steady 8.3 per cent, indicating a success-
ful foothold in this key Asia-Pacific region. The remaining
5 per cent falls under “Others”, suggesting potential for fu-
ture diversification into emerging markets.
Industry Overview
India is the largest provider of generic drugs globally and is
known for its affordable vaccines and generic medications. The
Indian Pharmaceutical industry is currently ranked third in phar-
maceutical production by volume after evolving into a thriving
industry growing at a CAGR of 9.43 per cent in the past nine
years. Generic drugs, over-the-counter medications, bulk drugs,
vaccines, contract research and manufacturing, biosimilars, and
biologics are some of the major segments of the Indian pharma
industry.
Indian pharmaceutical industry is known for its generic medi-
cines and low-cost vaccines globally. Transformed over the years
as a vibrant sector, presently Indian Pharma ranks third in phar-
maceutical production by volume. The Pharmaceutical industry
in India is the third largest in the world in terms of volume and
14th largest in terms of value. The Pharma sector currently con-
tributes to around 1.72 per cent of the country’s GDP.
Indian pharmaceutical sector supplies over 50 per cent of global
demand for various vaccines, 40 per cent of generic demand in
the US, and 25 per cent of all medicine in the UK. The domestic
pharmaceutical industry includes a network of 3,000 drug com-
panies and approximately 10,500 manufacturing units. 500 API
manufacturers are contributing about 8 per cent to the global
API Industry. India is the largest supplier of generic medicines. It
manufactures about 60,000 different generic brands across 60
therapeutic categories and accounts for 20 per cent of the global
supply of generics.
Continued On PG 2...

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CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)

SINCE 1986
India has the most number of pharmaceutical manufacturing
facilities that comply with the US Food and Drug Administration
(USFDA) and has 500 API producers that make for around 8 per
cent of the worldwide API market.
Pharmaceuticals is one of the top ten attractive sectors for for-
eign investment in India. The pharmaceutical exports from India
reach more than 200 nations around the world, including highly
regulated markets of the USA, West Europe, Japan, and Austra-
lia. India supplied around 45 tonnes and 400 million tablets of
hydroxychloroquine to around 114 countries globally. India’s
Cost Efficiency, Economic Drivers, Policy Support, and Increasing
Investment are the major reasons for the growth of the Indian
Pharmaceutical Sector.
Market Size of Pharma Companies
According to a recent EY FICCI report, as there has been a
growing consensus over providing new innovative therapies
to patients, the Indian pharmaceutical market is estimated
to touch USD 130 billion in value by the end of 2030. Meanwhile,
the global market size of pharmaceutical products is estimated
to cross over the USD 1 trillion mark in 2023.
The market size of India’s pharmaceutical industry is expected
to reach USD 65 billion by 2024. According to government data,
the Indian pharmaceutical industry is worth approximately USD
50 billion with over USD 25 billion of the value coming from ex-
ports.
Growth Triggers
Infrastructure and Expansion — Teva plant integration:
The company has completed the acquisition of a manufactur-
ing unit from Tevapharm India, thereby expanding its manufac-
turing capacity in the country. This acquisition adds capacity,
enhances backward integration, and contributes to revenue
growth.
New product development — Continuous pipeline expan-
sion with high-value products drives bottom-line growth.
Capacity expansion — Capex plans in US and UK facilities
address rising demand and improve productivity.
Market Focus
The US market is expected to experience sustainable growth
with new product launches and market penetration. The focus
is on OTC products, particularly in digestive, cough, and cold
segments. Continued revenue growth and margin improvement
are anticipated in the US market. The UK market is also expect-
ed to see robust growth due to new product launches and port-
folio mix.
Strategic Priorities
The company’s future priorities include sustainabl growth,
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​
February 2024
The Trick Is To
Spot Them At The
Larval Stage
maintaining balance sheet discipline, and pursuing
strategic opportunities. They plan to expand their product
pipeline with niche, high-value products, and invest in US and
UK facilities to enhance productivity and meet growing de-
mands.
The company plans to allocate free cash flow through dividends
and potential buybacks, with an expected 25 per cent effective
tax rate in the future. The Teva plant’s incremental revenue
potential is expected to be main growth driver. Contracts with
3.6 billion units are expected to increase to 8 billion units going
ahead.
Financial
In Q3FY24, on a consolidated basis, the net sales of the com-
pany increased by 22.15 per cent to Rs 586.13 crore as com-
pared to Rs 479.83 crore in the same quarter previous year and
sequentially increased by 10.33 per cent from Rs 531.24 crore.
The PBIDT, excluding other income of the company increased
by 73.56 per cent to Rs 133.02 crore as compared to Rs 76.64
crore in the same quarter the previous year and sequentially
increased by 16.74 per cent from Rs 113.95 crore. The Profit af-
ter tax of the company increased by 33.16 per cent to Rs 82.97
crore as compared to Rs 62.31 crore in the same quarter the
previous year and sequentially decreased by 1.06 per cent from
Rs 83.85 crore.
Valuation and Outlook
At TTM, shares of the company trading at a PE of 22.5 times
which is higher than its three-year median PE of 12.5 times and
lower than its Industry PE of 32.2 times. If we look at its PBV it is
currently at 3.75x which is a little higher than the industry PBV
of 3.72x. The company has a debt-to-equity ratio of 0.06x and a
PEG ratio of 0.43x.
If we look at the company’s last three-year profit CAGR stood
at 30 per cent and sales CAGR stood at 18 per cent
respectively. The company has a three-year average return on
equity of 21.6 per cent and a Return on Capital Employed of 27.9
per cent.
Marksans Pharma’s outlook is promising, with strong financial
performance, consistent revenue growth, rising profitability,
and cost optimisation. The company’s infrastructure and expan-
sion, including Teva plant integration and strategic capex plans,
position it for sustained growth.
The company’s focus on high-potential markets like the US
and UK, strategic priorities, and potential expansion in
emerging markets, complex molecules, and partnership oppor-
tunities offer further upside potential. These factors contrib-
ute to the company’s long-term value creation and potential
share price appreciation. Considering these aspects and the
above-mentioned factors, we recommend a BUY on the scrip
with the target price of Rs 206.00 representing an appreciation
of 30 per cent.
Continued On PG 3...
DSIJ INVESTMENT ADVISORY UNIT (CRU)
 February 2024
SINCE 1986

The Trick Is To
Spot Them At The
Larval Stage

Inc/Exp Statement (Consolidated) (Rs. in Crores )

Description Mar - 23 Mar - 22 Mar - 21 Mar - 20 Mar - 19
Net Sales 1852.14 1490.84 1376.18 1134.21 1000.07
Total Income 1911.45 1532.69 1382.88 1134.54 1004.70
Total Expenditure 1512.82 1231.96 1036.58 941.96 867.93
PBIDT 398.63 300.73 346.30 192.58 136.77
PAT 265.32 186.81 238.54 120.75 80.44
Dividend % 50.00 25.00 25.00 10.00 5.00
Adj. EPS(Rs) 5.88 4.51 5.76 2.86 1.87

Quarter On Quarter (Consolidated)Rs. (in Crores)

Particulars Dec - 23 Sept - 23 Q on Q Var % Dec - 22 Y on Y Var %
Net Sales 586.13 531.24 10.33 479.83 22.15
Total Expenditure 453.11 417.29 8.58 403.19 12.38
PBIDT (Excl OI) 133.02 113.95 16.74 76.64 73.56
PAT 82.97 83.85 -1.06 62.31 33.16
PBIDTM% (Excl OI) 22.70 21.45 5.83 15.97 42.14
PBIDTM% 23.51 25.03 -6.07 19.65 19.64
PATM% 14.15 15.78 -10.33 12.99 8.93
Adj. EPS(Rs) 1.84 1.84 0.00 1.57 17.20

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Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034

CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 February 2024
SINCE 1986

The Trick Is To
Spot Them At The
Larval Stage
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“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034

CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 February 2024
SINCE 1986

The Trick Is To
Spot Them At The
Larval Stage

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Research Analyst
DSIJ PRIVATE LIMITED, Research Analyst, regulated by the Securities and Exchange Board of India, Research
Analyst # INH000006396.
Disclaimer: The recommendations are purely a view point and there is no guarantee on the returns.
Hence all the clients (paid or unpaid) are requested to apply their prudence before acting on any of the
recommendations. Neither DSIJ PVT LTD nor any of its promoters, members, or employees shall be held
responsible for any losses incurred (if any) by acting on the recommendations.
Disclosure: Kindly refer to the detailed disclosures as per SEBI (Research Analyst) Regulations, 2014.
Placed at https://www.dsij.in/disclaimer
Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way
guarantee performance of the intermediary or provide any assurance of returns to investors.
Disclaimer : https://www.dsij.in/disclaimer

Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR service@dsij.in
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034

CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)