Recommendation from Pharmaceuticals Sector
This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon.
MARKSANS PHARMA : KEEPING GOOD HEALTH
HERE IS WHY
✓Good financial improvement
✓Good growth prospects
✓Good returns on capital employed.
Marksans Pharma is engaged in the business of formulation of pharmaceutical products. It has a presence in active pharmaceuticals ingredients (APIs), formulations and biopharmaceuticals. It is also actively engaged in research and development and offers contract research and manufacturing services (CRAMS) to global pharmaceutical companies. The company, engaged in the production of prescription drugs, caters to areas like oncology, gastroenterology, anti-diabetic, cardiovascular, pain management, gynaecology, and others.
In September 2020, the government announced a production-linked incentive (PLI) scheme for the pharmaceutical industry worth Rs 15,000 crore. The Indian government also plans to set up a nearly Rs 1 lakh crore fund to provide a boost to companies to manufacture pharmaceutical ingredients domestically by 2023. All this augurs well for Marksans Pharma. The company reported net sales of Rs 1,134.21 crore in FY20, an increase of 13.41 per cent. It had reported net sales of Rs 1,000.07 crore in FY19. The company reported PBIDT of Rs 192.25 crore in FY20, an increase of 45.49 per cent as against PBIDT of Rs 132.15 crore in FY19. The company reported PAT of Rs 120.75 crore in FY20, an increase of 50.12 per cent as compared to PAT of Rs 80.44 crore in FY19.
The company has reported cash from operating activities of Rs 209.94 crore in FY20 as against Rs 27.39 crore reported in FY19. The company reported net sales at Rs 168.46 crore in December 2020, up by 44.13 per cent from Rs 116.88 crore in December 2019. Its PBIDT was Rs 34.88 crore in December 2020, up 72.18 per cent from Rs 20.26 crore in December 2019. It reported quarterly net profit of Rs 29.10 crore in December 2020 as against net profit of Rs 12.98 crore in December 2019, an increase of 124.29 per cent. The company focuses on high-growth areas impacted by lifestyle disorders. Marksans Pharma has entered into strategic tie-ups and acquired key players in major markets to expand its global footprint.
The company has 50+ products in the pipeline in different stages to cater to the UK market while six new approvals are awaited in the US. It is also awaiting approval for 20 MAs in the UK market. For rapid expansion into various therapy areas and other markets, including the UK and Europe, the company plans to acquire product licenses. The company is increasing partnership with major national distributors, pharmacies, retailers and chemist wholesalers. It has plans to acquire manufacturing assets in India as well as marketing licenses in Europe and USA to expand business operations in regulated markets.
The company has a sustainable business model with a strategic focus on regulated markets. It operates with a forward integrated business model with presence across the pharmaceutical value chain including in-house research and development centres, owned and outsourced manufacturing set-up and widespread supply chain and distribution network through subsidiaries in USA, UK and Australia. It has a strong commitment to research and development, leading to a robust pipeline of newly developed and under development products to add on to its existing 300+ approved ANDAs. The company is almost debt-free with a total debt to equity ratio of 0.0297. On the returns front, it has ROE and ROCE of 20.49 per cent and 25.57 per cent, respectively. By virtue of these factors, we recommend our reader-investors to BUY this stock.
