Marksans Pharma- Can it be the next Pharma Biggie?

as Gaurang posted in Granules forum…

1 Like

Q3 Result declared by Marksan pharma…
Its disappoint numbers…

Consolidated:
Sales up 2% (217 cr v 213 cr)
PAT down 35% (18.6 cr vs 28.4 cr)

I think it wii go for LC on monday…

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/0AC3BB9A_AA6A_4A0F_AF5C_2EB1CB214679_185333.pdf

One interesting fact I observed in the results is “Employee Benefits” which is 36Crs whereas for the same quarter last year it was 17Cr. So this 19Cr difference has added to reduction in the bottom line. If we add that to the PAT then it comes to 30Cr+.

We need to understand the above surge in the Employee Benefits Expenses. Better to wait for CEO’s address. I am assuming that they are investing on marketing or something similar.

The Depn has also doubled …

looks like the manpower for some new facility about to come on steam

The increase in employee cost in last couple of quarters is due to the acquisition of Time Cap Labs and its employee base.

Results look bad, but i will give company couple of more quarters, as after a stellar turnaround it needs to consolidate before going to next level of growth. I would be adding if at all there is any sharp reaction of say 20% LC
Disc.- Invested from 9 levels and adding in the current fall.

1 Like

Is it correct to add the expenses of TimesCap without accounting is sales and profit. I was hearing that end of this FY TimesCap will be integrated.

when in conf.call…
I requet anyone to post here conf.call updates…

It is very sad to see the EBITDA and PAT is down by 41.68% and 35% respectively y-o-y.

EBITDA down at rs.21 crores compared to rs.48 crores NP down at rs.18 crores compared to rs.27.7 crores

The other expenses increased by rs.15 crores and employee expenses increases by about rs.20 crores (I believe this is due to Timecap aquisition).

Something seems to be seriously wrong as the company revenue increased only by 1.9% even after Time-cap lab Aquisition.

Time cap is $30 million revenue company which means quarterly revenue in rupees should be 51 crores which hasn’t been translated into topline. Topline is at rs.217 crores as against rs.213 crores that means company has significantly eroded it’s revenue in some other geographies, it could be UK or Europe.

So the benefit of Aquisition hasn’t been seen in topline but other expenses and employee cost increased during the quarter.

The company has hit hard somewhere, company has chosen not to disclose the quarterly distribution of revenue from geographies.

2 Likes

MD Mark said long back that TimesCap merger will complete by end of the FY16. So TimesCap numbers will get reflected only in March. In the quarterly they have clearly mentioned about subsidiary’s whose results are included. TimesCap is not included in that list.

Ideally, without merger they shouldn’t include the expenses of the TimesCap, but I am not sure if there are any provisions in accounting that allow it. If so, when the yearly consolidated results are published then TimesCap would boost the PAT as expenses are already accounted in the Q2/Q3/Q4 quarters.

I am sure they are facing tough competition in UK for their product Metaformin, not sure whether it is from Granules. Even then I feel Mark Saldana is a able person who turned his company from a loss-making to profit making that too with a good track record of continuous growth in top line. As a long term investor one shouldn’t much worry for one year’s performance but in long term the company should sustain, innovate itself to handle tough competition.

Even I am not worried much of UK MHRA observations as long as no ban comes because in longer run it will make the pharma company a good quality oriented.

PS: I am invested from 20 levels. I see Mark will be at least eyeing to match Glenmark in a longer run.

Hello

the consolidated results include the results of Nova Pharmaceuticals, Marksans Pharma (UK) and Marksans Pharma Inc (USA). Time cap is part of Marksans Pharma Inc (USA), thus the results of Time cap are included in the consolidated results.

Please see link below to validate

consolidated results

http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/0AC3BB9A_AA6A_4A0F_AF5C_2EB1CB214679_185333.pdf

press release of aquisition of Time cap which clearly mentions it is acquired through Marksans Pharma Inc

http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/6737C123_601D_4548_A14B_B03DE6D7528C_095912.pdf

Sorry for my oversight. Looks like it’s is included under Marksans Pharma Inc (USA). Now increased employee expenses makes sense. I was expecting them to quote explicitly about the TimeCap.

yes, which makes me worry about the results.

check the below tables and do the math

thus Europe, UK revenue QoQ will be

Q1 - Rs.133 crores

Q2 - Rs. 110 crores

Q3 - Rs. 101 crores

US revenue QoQ will be

Q1 - Rs.43 crores

Q2 - Rs. 114 crores

Q3 - Rs. 84 crores

So QoQ, Marksans loosing the revenue from UK and Europe.

I would like to ask management why there is very significant revenue drop from Europe and what steps management taking to revive the growth.

They were banned by UK Authorities. CS told people it will not affect business… After learning this, I sold the stock at 85. Not investing my money where management is not transparent and hides information.

1 Like

Hi Vijay,

Can you please provide the link about ban ?

do you have more details about what is banned, when ? because in Q3, there revenue is still Rs.100 crores.

Thanks
Kapil

1 Like

Vijay apparently you mixing two different issues !

but clearly you are a lucky man :wink:

I did not sell because this ban will affect business.
I sold because they were not transparent.
In India, never invest in companies that are not transparent. Strides is another example.

2 Likes

I like the approach ! For the same reasons i have never ever invested in Reliance. During some unrelated interaction in moscow i found that they dont move around the laws , they possibly write the laws ha ha ha but still they dont get my vote

I am happy to find another one in you.

@Vijayk could you elaborate or cite an example which makes you think Strides not a transparent company. I am curious.