Buy Marksans Pharma, target price Rs 66.6: HDFC Securities

HDFC Securities has buy call on Marksans Pharma with a target price of Rs 66.6. The current market price of Marksans Pharma is Rs 59.75. Time period given by analyst is 2 quarters when Marksans Pharma price can reach defined target.

Marksans Pharma, incorporated in the year 1992, is a Small Cap company (having a market cap of Rs 2423.92 Crore) operating in Pharmaceuticals sector.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 466.72 Crore, up 3.65 % from last quarter Total Income of Rs 450.27 Crore and up 26.22 % from last year same quarter Total Income of Rs 369.77 Crore. Company has reported net profit after tax of Rs 60.12 Crore in latest quarter.

The company’s top management includes Mr.Mark Saldanha, Mrs.Sandra Saldanha, Mr.Varddhman V Jain, Dr.Sunny Sharma, Mr.Digant Mahesh Parikh, Mr.Abhinna Sundar Mohanty, Mr.Seetharama R Buddharaju, Dr.(Mrs.)Meena Rani Surana. Company has MSKA & Associates as its auditors. As on 30-09-2022, the company has a total of 41 Crore shares outstanding.

Investment Rationale
The company's margin is expected to improve on the back of normalisation of operating expenses, balanced focus on both OTC and prescription segments as well as backward integration (API business). Marksans Pharma has strong balance sheet with cash & equivalents of Rs335 crore as on Sept-2022.

The brokerage estimates 16.7% CAGR in revenue led by strong growth from UK and Australia & New Zealand and healthy growth from US market over FY22-24E. Furthermore, HDFC Securities expects margin of around 17-18% over the next two years. Also, the brokerage has factored conversion of warrants from FY23E and thus increased equity from 40.9cr shares to ~46cr equity shares.

Promoter/FII Holdings
Promoters held 48.6 per cent stake in the company as of 30-Sep-2022, while FIIs owned 4.04 per cent, DIIs 0.95 per cent.