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Report By: Vikash Kandoi

vikash@dynamiclevels.com

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Marksans Pharma

Health Care in Safe Hands

Company Overview and Stock price .3

Product Overview....4

Marksans Goa Plant...7

Marksans R&D.....8

Industry Outlook10

Company Financial.....13

Balance Sheet......14

Cash Flow.....15

Key Ratios....15

Peer Comparison......16

Shareholding Pattern....... 18

Investment Rationale..............19

Disclaimer20

Buy Price: Rs 49 Target: 70 FY16P/E: 42

Page 2 Source: Company, www.dynamiclevels.com

 Companys Overview and Stock Price
Marksans Pahrman focus lies in the OTC & prescription drugs that have wide-
EXCHANGE SYMBOL MARKSANS
ranging applications across fields like
Sector PHARMA
Oncology Current Price * (Rs.) 53.75

Gastroenterology
Face Value (Rs.) 1
52 Week High (Rs.) 113.90 (28-Dec-
Antidiabetic, Antibiotics 15)
Cardiovascular 52 Week Low (Rs.) 33.50 (01-Mar-16)

Pain Management
Life Time high (Rs.) 115.00 (10-Aug-
15)
Gynaecology Life Time low (Rs.) 0.87 (28-May-03)
Average Daily Movement 3.25
Marksans R&D capabilities include dossier development, chemical synthesis,
Average Volume [20 days] 5506566
process optimization, formulation development, analytical development and
1 Month Return (%) 31.7
conducting stability studies. The company has a team of over 50 experienced
scientists specializing in formulation development and analytical development. Consolidated Trailing PE 45.77
Ratio
The conpany has possessed end-to-end capabilities from Lab scale Book Value 10.79
development to Pilot scale up and from commercializing the product for large Market Cap 2202.11 (Cr)
scale manufacturing to marketing globally. % of Promoter holding 0
pledged
The company has achieved global recognition within a very short span of time
and has major global expansion plans for the near future.
This is a weekly chart of Marksans Pharma
showing the stock has gain momentum from
40 levels and giving breakout of 53 levels.
The table is showing NSE Index performance sorted on 1 Month
percentage change
1Year
# Symbol 1Month% 3Months% 6Months%
%
1 NIFTY AUTO INDEX 4.32 15.68 27.16 32.27
2 NIFTY PHARMA 3.47 6.25 10.43 -7.26
INDEX
3 NIFTY MEDIA INDEX 2.95 16.68 31.68 27.46
4 NIFTY FINANCE 2.41 12.18 25.64 14.97
INDEX
5 BANK NIFTY 2.27 11.10 25.45 13.73
6 NIFTY ENERGY 2.23 13.87 18.02 31.30
INDEX
7 NIFTY REALTY INDEX 1.72 7.34 40.01 19.71
8 NIFTY 1.60 6.60 15.11 11.50
9 NIFTY METAL INDEX -0.03 20.39 38.63 60.64
10 NIFTY IT INDEX -0.24 -6.30 -6.79 -12.67
11 NIFTY FMCG INDEX -1.24 2.41 13.12 12.55

Pharma index has underperformed in 3 months, 6 months and 1 year. But

started performing from last 1 month and has become 2nd Top performing
Index.

Page 3 Source: Company, www.dynamiclevels.com

 Marksans has focused towards
Product overview formulation development and have a
strong back up in terms of R&D and
Marksans Pharma has established world-class formulation aggressive marketing plans.
manufacturing facilities by leveraging state-of-the-art technology,
incorporating best practices and adhering to stringent regulatory
compliances. These are Centers of Excellence committed to
creating the highest quality products.
The company has highly sophisticated manufacturing plant in Goa
is spread over a sprawling 18,000 sq. m. It is home to cutting-
edge product innovation and formulation development processes
that cater to global needs.
Manufacturing facility at Goa has advanced infrastructure and
automated manufacturing and packaging lines that are specially Marksans Pharma has
designed to meet global statutory requirements. highly sophisticated
manufacturing plant in
The plant is approved by regulatory bodies such as: Goa is spread over a
sprawling 18,000 sq.
U S Food and Drug Administration (US FDA) m.
Therapeutic Goods Administration (TGA)
Medicines and Healthcare products Regulatory Agency
(MHRA) - United Kingdom
Marksans have a WHO GMP certificates
The company manufactures a wide range of solid oral dosage in
the form of:

Tablets (plain, enteric coated and film coated)

Hard Gelatin Capsule
Soft Gelatin Capsules

Market: Unites States (US)

The US pharmaceutical market is one of the key focus areas for
Marksans Pharma. The company has achieved the required The US pharmaceutical
approvals from the US FDA and has actively started exporting market is one of the key
formulation to US. focus areas for
Marksans Pharma.
The companys target is the technology driven niche liquid gel
market which is tapped by select players, thus providing
differentiation. Marksans offers innovative product offerings
through exclusive tie-ups, supply and marketing arrangements.

Page 4 Source: Company, www.dynamiclevels.com

Europe
Led by Marksans subsidiaries Bell, Sons & Co (Druggists) Ltd. and Marksans Pharma Ltd
Relonchem Ltd., Marksans Pharma Ltd. has established a strong product list contains 79
foothold in the European markets. They have a strong presence in the products in Europe
OTC and formulations space and continue to leverage their strengths in
manufacturing and distribution.
Marksans Pharma is engaged in supply of pharmaceutical products to
clients such as Boots, Almus, Actavis, Teva, Genepharma and Mylan.
In addition, they also assist requirements such as Dossier development,
Filing and Commercial Supply to European Customers.

South East Asia

Marksans Pharma has 300+
Marksans started operations in the Asian region in 2008. The vast and products registrations covering
diverse Asian continent has been the focal point of Marksans 9 countries with advantage
international operations. With 300+ product registrations covering 9
position in the Asian region
countries, Marksans has a vantage position in the Asian region.
Backed by a strong product portfolio and a highly promising pipeline of
pending product registrations, Marksans is well positioned to realize the
true potential of these markets. Their aim is to reach out to different
territories in the worlds largest continent by offering pharmaceutical
products encompassing a wide range of therapeutic indications with
impeccable quality at par with international standards. Key Brands In Africa
Clavmark
Africa Furomark
The African market presents extensive opportunities for Marksanss
Ampimark
international operations. With 40 product registrations, Marksans is
consolidating its position in the African region. The company has a Amoxmark
strong product portfolio for these markets are has plans for offering a Leximark
comprehensive array of products in the near future.
The company aspires to gain a strong foothold in this region by offering
high quality and value-based pharmaceutical products, which are at par
with international standards.

Russia & CIS

Page 5 Source: Company, www.dynamiclevels.com

Marksans Pharma is currently exporting its products to CIS and Russia.
Their focus is to leverage their strengths in research, IP and
manufacturing to build strategic alliances and to increase presence and
participation in these markets.

The Company remains committed to growing their presence in these

markets by delivering high quality products at affordable prices and Areas of Operations
constantly upgrading their offerings. In addition, introduction of newer
products in existing markets and entry in new territories will impel their Russia
growth in these markets. Ukraine
Kazakhstan
Georgia
Moldova
Latin America

Marksans aims to penetrate the Latin American market with its high
quality products and extensive product portfolio. Strong economic
performance in this region is expected to fuel growth in the coming
years. In addition, recent regulatory developments will create further
market opportunities in the country, particularly for generic producers
in both the private and public sectors.
Areas of Operations
In Ecuador, the pharmaceutical industry is expected to perform well in Ecuador
the coming years, with strong growth in production, sales, exports and Jamaica
employment. Pharmaceutical companies, however, are encouraged to
Nicaragua
act in smaller Latin American markets to maximize their full regional
sales potential. Central America
South America
Generics consumption in Latin America is high. Marksans Pharma is
Caribbean Islands
currently operating in Central America, South America & Caribbean
Islands with 15 products registered and 70 products are submitted to
MOH (Ministry of Health).

Australasia
Areas of Operations
Marksans has gained a foothold in the prestigious Australasia markets
Analgesics
through its acquisition of Nova Pharmaceuticals Australasia Pty Ltd. in
2005. They are now a prominent distributor to popular retail brands in Anti allergy
the region. Antibacterial
Antibiotic
Through Nova, Marksans now holds 30 MAs and has become one of the
biggest suppliers of generic products here. They continue to grow Antiulceratives
rapidly and expand into key therapeutic classes. They are leveraging Hypertension
this opportunity and reaching out to the New Zealand pharmaceutical
market as well.

Page 6 Source: Company, www.dynamiclevels.com

About Marksans Goa Plant
Marksans Pharmas premier manufacturing and R&D facility is located
at Goa, India. The formulation plant here is spread across an 18,000
square feet campus. The plant is a 100% EOU has been designed to
accommodate rapid future expansion.

The entire facility has been built to adhere to the US FDA guidelines
and has been approved by various international bodies such as US FDA,
UK MHRA, Australian TGA and ANVISA (Brazil). The facility houses
a pilot manufacturing plant and has also received recognition from the
Department of Scientific and Industrial Research (DISR).

This facility is one of the biggest manufacturing facilities for soft

gelatin capsules and tablets in Asia.

The plant has fully automated packaging capabilities. In addition, the

plant also has an R&D centre that comprises of three key divisions for
formulation development, devising analytical methods and conducting
stability studies.

Marksans Pharma has another manufacturing facility at a multi-purpose

UK MHRA licensed factory in Southport, UK. This setup is primarily
engaged in manufacturing non-sterile liquids, ointments and powder
products.

The companys production lines have the following manufacturing

capacities and capabilities:

Oral liquids in batches up to 8000liters

Non-oral liquids up to 3000liters
Blended powders up to 800kilograms
Ointments up to 400kilograms
Liquid packaging - from 5ml up to 5liters (bottles)
Ointments and powders packaging 5g to 5kg
(containers)
Powder filling 5g to 20g (sachets)

In addition, they also have a fully-staffed development laboratory and

have the capability to develop and improve formulations. Their
Regulatory Department provides the necessary in-house support with
respect to regulatory affairs, license variations and applications.

Page 7 Source: Company, www.dynamiclevels.com

Marksans R&D
THE CONTRACT RESEARCH AND MANUFACTURING The Compnay have long-term (7-10
SERVICES (CRAMS) years) licensing agreements with
several companies for development
Marksans have completely integrated R&D, technology and engineering and supply of products
capabilities that enable us to be cost effective partners on a sustainable basis. Global presence
They have built strong alliances and continuing relationships with top global
Low cost manufacturing base
generic companies to offer R&D and formulation development services.
World class manufacturing
The Contract Manufacturing Division is being set up to address the challenges capacities/ plant, huge capacities
and opportunities created due to increasing R&D costs, low R&D productivity, Approvals from Global Health
impending patent expirations and at the same time, pressure to reduce
Authorities like US FDA, UK
healthcare costs. This in turn has propelled global pharma majors to cut costs
and improve overall profitability. This is expected to translate into a strong MHRA, Australia TGA
outsourcing potential for low cost manufacturing destinations like India. Strong R&D and dossier
development capabilities
More than 125 plus product IP for
INDIA OFFERS THE FOLLOWING ADVANTAGES TO regulated markets
INNOVATOR COMPANIES More than 500 plus product IPs in
semi-regulated markets
Strong chemistry skills as demonstrated in the domestic market Only company in India having
Low labour cost (1/7th ) compare to that in USA USFDA/ TGA/ MHRA approval for
Lower cost of manufacturing (30-40%) as compared to western softgel products
countries with same quality Among the very few companies in
Integrated business model creating a 'one stop' shop for India offering CRAMS for US/
innovators global markets into formulation
India has six times the number of trained chemists as the US, development and manufacturing
which are available at 1/10th of the cost
India has over 75 USFDA approved plants (the highest no. of STRATEGY
FDA approved plants outside the US) The company plans to enhance its
Abundant English speaking skilled manpower product portfolio with the addition of
High quality telecom and IT infrastructure 12-13 products every year
Indian companies have better regulatory skills like IPR
adherence Offering CRAMS for existing and
emerging markets is envisaged as one
of the major driver and revenue
WHY MARKSANS PHARMA CRAMS? earner for the company

Marksans Pharma has alliances with the top MNC generic

companies for contract manufacturing of 30 generic products
for the European markets

Page 8 Source: Company, www.dynamiclevels.com

Out Licencing

Marksans is committed to developing new drugs and has

embarked on forging out-licensing agreements with other global
pharmaceutical majors.

They are actively seeking out-licensing arrangements and

strategic partnerships with international specialty pharmaceutical
companies focused on the marketing of generic pharmaceuticals
to enter new segments and grow in these markets.

OUT-LICENSING IN INDIA

Out-licensing is a relatively new phenomenon in the Indian

pharmaceutical sector. Very few Indian companies have the
required in-house facilities to develop patented products.

An out-licensing strategy can make a critical drug globally

accessible, and technology collaboration can enable an
experimental drug to make it to the market quicker. This is also
significant in the global pharmaceutical sector, as development of
new drugs and out-licensing allows their partners access to a
diverse selection of the most sought after drugs and research
compounds.

WHY MARKSANS FOR OUT-LICENSING?

Marksans has state-of-the-art research facilities, equipped with the

latest infrastructure, which are led by highly qualified scientists
from institutions having international recognition. This facilitates
us to develop new generation drugs, formulations and novel drug
delivery vehicles, as per international standards and regulations.

Page 9 Source: Company, www.dynamiclevels.com

Industry Outlook Following the introduction of product
patents, several multinational
REASONS TO INVEST companies are expected to launch
India is expected to rank amongst the top three pharmaceutical patented drugs in India.
markets in terms of incremental growth by 2020. The purported rise of lifestyle
India will become the sixth largest market globally in terms of diseases in India is expected to boost
absolute size by zero. industry sales figures.
Indias generic drugs account for 20% of global exports in Over USD 200 Billion is to be spent
terms of volume, making the country the largest provider of on medical infrastructure in the next
generic medicines globally. decade.
Indias cost of production is significantly lower than that of the Rising levels of education are set to
USA and almost half of that of Europe. increase the acceptability of
A skilled workforce as well as high managerial and technical pharmaceuticals.
competence. Indias patient pool is expected to
Economic prosperity is likely to improve affordability for increase to over 20% in the next 10
generic drugs in the market. years, mainly due to the rise in
Approval time for new facilities has been drastically reduced. population.

STATISTICS
FDI POLICY
The countrys pharmaceuticals industry is expected to account
for about 3.1-3.6% of the global pharma industry by value and 100% Foreign Direct Investment
currently accounts for 10% by volume, by 2016. (FDI) is allowed under the automatic
Industry revenues are expected to expand at a CAGR of 12.1% route for Greenfield projects.
during 2012-20 and reach USD 45 Billion. For brownfield project investments,
The healthcare sector in India is expected to grow to USD 250 up to 100% FDI is permitted under
Billion by 2020 from USD 65 Billion currently. the government route.
The generics market is expected to grow to USD 26.1 Billion by The government may incorporate
2016 from USD 11.3 Billion in 2011. appropriate conditions for FDI in
brownfield cases, at the time of
GROWTH DRIVERS granting approvals.
Non-compete clauses are not
Between 2011 and 2016, patent drugs worth USD 255 Billion
allowed except in special
are estimated to go off-patent leading to a huge surge in generic
circumstances, with the approval of
product and tremendous opportunities for companies.
the Foreign Investment Promotion
By 2020, it will grow to USD 11 billion - a CAGR of 18%, with
Board.
the potential to reach USD 13 billion - at an aggresive CAGR of
The FDI is subject to applicable
20%.
regulations and laws.
With increasing penetration of chemists, especially in rural
India, OTC drugs will be readily available.
Pharma companies have increased spending to tap rural markets
and develop better infrastructure. The market share of hospitals
is expected to increase from 13.1% in 2009 to 26% in 2020.

Page 10 Source: Company, www.dynamiclevels.com

SECTOR POLICY
The National Pharmaceutical Pricing Policy, 2012 (NPPP-2012)
has been notified on December 7, 2012.
The salient features of the NPPP-2O12 are as under:
The regulation of prices of drugs on the basis of the
essentiality of drugs as specified under the National List
of Essential Medicines (NLEM)- 2011.
The regulation of prices of drugs on the basis of
regulating the prices of formulations only.
The regulation of prices of drugs on the basis of fixing the
ceiling price of formulations through Market Based
Pricing.
The provision of exemptions to drugs manufactured
through indigenous R&D from price control for five
years.
A Drug Price Control Order 2013 has been notified in
May 2013 to implement the provisions of NPPP-2012.
FINANCIAL SUPPORT
KEY PROVISIONS IN THE 2O15-16 UNION BUDGET:
The threshold limit for applicability of transfer pricing
regulations to specified domestic transactions increased
from INR 0.05 billion to INR 0.2 Billion.
Service Tax exemption for common effluent treatment
plant operators.
Rate of income tax on royalty and fees for technical
services reduced from 25% to 10% to facilitate
technology inflow.
Time limit for taking CENVAT credit on inputs and input
services have been increased from six months to one year.
R&D BENEFITS:
Industry/private sponsored research programmes:
A weighted tax deduction is given under section 35
(2AA) of the Income Tax Act.
A weighted deduction of 200% is granted to assess for
any sum paid to a national laboratory, university or
institute of technology, or specified persons with a
specific direction provided that the said sum is used for
scientific research within a programme approved by the
prescribed authority.
Page 11
Companies engaged in manufacture having
an in-house R&D centre:
Weighted tax deduction of 200% under
section 35 (2AB) of the Income Tax Act for
both capital and revenue expenditure
incurred on scientific research and
development. Expenditure on land and
buildings are not eligible for deduction.
A national centre to help develop bulk
drugs and facilitate their research is being
set up in Hyderabad.
Duty free import of Pharmaceuticals
reference standards.
INVESTMENT OPPORTUNITIES
India is expected to be the third largest
global market for active pharmaceutical
ingredients by 2016, with a 7.2% increase
in market share.
Indian pharma companies registered 49%
of overall DMF filed in the US in 2012.
The Contract Research and Manufacturing
Services industry estimated at USD 8
Billion in 2015, up from USD 3.8 Billion in
2012. The market has more than 1000
players.
The formulations industry India is the
largest exporter of formulations with 14%
market share and ranks 12th in the world in
terms of export value. Double-digit growth
is expected over the next five years.
FOREIGN INVESTORS
Teva Pharmaceuticals (Israel)
Nipro Corporation (Japan)
Procter & Gamble (USA)
Pfizer (USA)
Glaxo Smith Kline (UK)
Johnson & Johnson (USA)
Otsuka Pharmaceutical (Japan)
AstraZeneca (Sweden-UK)
Source: Company, www.dynamiclevels.com
Company Financials
Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-16
Quarterly Quarterly Quarterly Quarterly Quarterly Annual
Net Sales/Income from operations 186.75 210.23 217.41 255.53 210.16 893.33
Other Operating Income 0.01 6.45 0.10 0.01 2.30 8.87

Total Income From Operations 186.76 216.68 217.51 255.54 212.46 902.19
Increase/Decrease in Stocks -16.50 1.59 1.99 3.03 -1.77 4.84
Consumption of Raw Materials 91.32 96.40 75.20 96.70 72.97 341.27
Purchase of Traded Goods 34.97 46.78 33.89 36.58 46.33 163.58
Employees Cost 38.26 31.11 36.54 36.53 18.24 122.42
Depreciation 4.82 8.36 9.76 5.48 4.52 28.13
Other Expenses 30.44 30.04 39.30 31.33 24.28 124.95

Total Expenditure 183.31 214.28 196.69 209.64 164.58 785.19

Operating Profit 3.45 2.40 20.82 45.90 47.88 117.01
P/L Before Int., Excpt. Items & Tax 3.45 2.40 20.82 45.90 47.88 117.01
Interest 1.28 1.97 2.34 2.87 2.98 10.16
P/L Before Exceptional Items & Tax 2.17 0.43 18.48 43.03 44.90 106.85
P/L Before Tax 2.17 0.43 18.48 43.03 44.90 106.85
Tax 0.30 4.38 -0.17 7.33 12.57 24.11
P/L After Tax from Ordinary Activities 1.87 -3.95 18.66 35.71 32.34 82.74
1.87 -3.95 18.66 35.71 32.34 82.74
PAT
Minority Interest -0.85 -1.81 -0.72 -0.83 -0.87 -4.23
1.02 -5.76 17.93 34.87 31.47 78.51
Net Profit/(Loss) For the Period
Equity Share Capital 40.93 40.93 40.93 40.93 40.93 40.93
Reserves -- 400.89 -- -- -- 400.89
Equity Dividend Rate (%) -- -- -- -- -- --
0.05 -- 0.46 0.87 0.79 2.02
EPS (Rs.) [After Extraordinary items]

Companys revenue has fallen by 11.16% QoQ from Rs. 210.23 crs to Rs. 186.75 crs.
Companys total expenditure has gone down drastically from Rs. 214.28 crs to Rs. 183.31 crs almost
14.45%.
Company has lower down its interest outgo.
From loss company has posted positive result. From Rs. -5.76 crs to Rs. 1.02 this can be turnaround
for the company.

Balance sheet

Page 12 Source: Company, www.dynamiclevels.com

 In Cr. Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDERS FUNDS
Equity Share Capital 40.93 40.93 38.53 38.53 36.78
Preference Share Capital 12.5 12.5 13.5 13.5 13.5
Total Share Capital 53.43 53.43 52.03 52.03 50.28
Reserves and Surplus 369.27 304.75 107.89 57.95 -239.52
Total Reserves and Surplus 369.27 304.75 107.89 57.95 -239.52
Money Received Against Share Warrants 0 0 0 0 1.16
Total Shareholders Funds 422.7 358.18 159.92 109.98 -188.08
NON-CURRENT LIABILITIES
Long Term Borrowings 0 0 19.82 7.88 15.2
Deferred Tax Liabilities [Net] 0.31 0.5 1.87 2.22 12.59
Total Non-Current Liabilities 0.31 0.5 21.68 10.1 27.79
CURRENT LIABILITIES
Short Term Borrowings 40.62 43.52 58.06 75.31 77.18
Trade Payables 31.41 44.58 40.5 29.86 29.48
Other Current Liabilities 0.68 39.88 73.59 75.05 294.43
Short Term Provisions 38.49 40.45 22.68 9.95 5.12
Total Current Liabilities 111.19 168.43 194.83 190.17 406.22
Total Capital And Liabilities 534.2 527.11 376.43 310.25 245.93
ASSETS
NON-CURRENT ASSETS
Tangible Assets 90.32 77.72 49.39 50.29 48.96
Intangible Assets 7.15 12.29 17.43 22.56 27.7
Fixed Assets 97.47 90.01 66.82 72.85 76.66

Non-Current Investments 231.44 67.62 67.62 67.62 23.51

Long Term Loans And Advances 1.25 0.83 1.5 1.2 3.95

Total Non-Current Assets 330.16 158.45 135.93 141.67 104.12

CURRENT ASSETS
Inventories 43.74 51.03 55.61 51.32 40.25
Trade Receivables 133.41 124.63 112.38 91.42 74.19

Cash And Cash Equivalents 3.13 167.54 33.37 0.41 17.58

Short Term Loans And Advances 23.76 25.46 39.14 25.43 9.78
Total Current Assets 204.04 368.66 240.5 168.57 141.81
Total Assets 534.2 527.11 376.43 310.25 245.93

Page 13 Source: Company, www.dynamiclevels.com

Cash Flow
Product Name Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
Net Profit/Loss Before Extraordinary Items And -29.61 22.42 23.93 107.81 74.94
Tax
Net Cash Flow From Operating Activities 74.53 48.34 62.97 106.31 76.26
Net Cash Used In Investing Activities -61.82 -50.22 -225.52 -241.51 -40.14
Net Cash Used From Financing Activities -12.79 -18.37 116.45 187.12 -11.09
Foreign Exchange Gains / Losses 0.00 0.00 0.00 0.00 0.00
Adjustments on Amalgamation / Merger / Demerger / 0.00 0.00 0.00 0.00 0.00
Others
Net Inc/Dec In Cash And Cash Equivalents -0.08 -20.26 -46.10 51.93 25.03
Cash And Cash Equivalents Begin of Year 22.50 42.76 88.86 36.93 11.90
Cash And Cash Equivalents End Of Year 22.42 22.50 42.76 88.86 36.93

Company has a positive operating cash flow

Company has made some capital investment in last year

Ratio Analysis

Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

Per Share Ratios
Basic EPS (Rs.) 1.75 1.64 1.44 1.03 -4.92
Diluted EPS (Rs.) 1.75 1.64 1.44 1.03 -4.70
Cash EPS (Rs.) 2.11 1.86 1.67 1.25 -4.43
Book Value [ExclRevalReserve]/Share (Rs.) 10.02 8.45 3.80 2.50 -5.48
Book Value [InclRevalReserve]/Share (Rs.) 10.02 8.45 3.80 2.50 -5.48
Dividend / Share(Rs.) 0.12 0.12 0.10 0.00 0.00
Net Profit/Share (Rs.) 1.75 1.64 1.44 1.03 -4.92
Profitability Ratios
PBDIT Margin (%) 31.43 29.29 27.66 25.19 -74.92
PBIT Margin (%) 27.31 27.07 24.91 20.66 -86.56
PBT Margin (%) 25.58 23.83 20.08 15.39 -118.31
Net Profit Margin (%) 19.96 16.54 17.64 20.58 -117.12
Return on Networth / Equity (%) 17.42 19.41 37.94 41.02 0.00
Return on Capital Employed (%) 16.89 18.70 30.59 32.96 112.96
Return on Assets (%) 13.38 12.73 14.75 12.75 -73.62
Total Debt/Equity (X) 0.10 0.13 0.53 0.86 -0.46
Asset Turnover Ratio (%) 67.04 76.94 83.66 61.98 62.86
Liquidity Ratios
Current Ratio (X) 1.84 2.19 1.23 0.89 0.35
Quick Ratio (X) 1.44 1.89 0.95 0.62 0.25
Inventory Turnover Ratio (X) 8.19 7.95 5.66 3.75 3.84
Dividend Payout Ratio (NP) (%) 8.09 8.62 8.63 0.00 0.00
Dividend Payout Ratio (CP) (%) 6.71 7.60 7.47 0.00 0.00
Valuation Ratios
Enterprise Value (Cr.) 1,941.02 2,411.90 980.81 246.55 148.99
MarketCap/Net Operating Revenue (X) 5.28 6.22 2.93 0.78 0.39
Price/BV (X) 4.61 7.30 6.30 1.56 -0.30
Price/Net Operating Revenue 5.28 6.22 2.93 0.78 0.39
Earnings Yield 0.04 0.03 0.06 0.26

Page 14 Source: Company, www.dynamiclevels.com

 Peer Comparison
Company Name Last Price 52 Wk High 52 Wk Low Net Profit Sales Profit Margin
AJANTA PHARMA 2074.90 2091.00 1101.05 119.55 471.02 25.38%
DISHMAN 237.75 228.00 127.95 45.51 375.40 12.12%
GRANULES 122.80 164.40 101.40 31.87 343.73 9.27%
UNICHEM 271.80 334.10 188.50 25.77 341.97 7.54%
NATCO PHARMA 619.75 702.65 390.00 47.43 325.22 14.58%
JB CHEMICALS 371.95 396.20 228.00 49.86 309.23 16.12%
AARTI DRUGS 638.65 647.90 431.60 19.94 291.88 6.83%
SYNGENE 487.70 523.90 317.45 59.80 274.50 21.79%
FDC 222.60 274.35 165.00 48.97 264.49 18.51%
MERCK 712.00 818.00 620.00 17.90 257.74 6.94%
INDOCO REMEDIES 330.30 362.00 232.90 19.79 257.37 7.69%
HIKAL 205.35 216.35 107.05 10.96 221.23 4.95%
MARKSANS PHARMA 54.85 113.90 33.50 1.87 186.76 1.00%
SHILPA MEDICARE 559.40 612.90 355.00 24.14 154.46 15.63%
NEULAND LAB 1002.40 1080.00 491.00 9.71 149.77 6.48%
SMS PHARMA 106.25 137.15 58.80 9.15 145.85 6.27%
BLISS GVS 148.45 210.50 79.05 27.44 140.14 19.58%
SUVEN 206.30 308.70 144.30 32.58 133.23 24.45%
MOREPEN LAB 26.15 41.75 13.35 4.01 118.44 3.39%

Peer Comparison on leverage basis

Marksans Pharma has low profit margin in comparison to its peer companies. But company is trying

INSTRUMENT Price Avg. Volume Market Cap (Rs. in Cr) % FII Holding
AJANTA PHARMA 2074.90 157848 18260 9.87
BLISS GVS 148.45 266067 1531 4.25
DISHMAN 237.75 2444623 3837 13.47
FDC 222.60 186156 3959 0.00
GRANULES 122.80 1408629 2666 7.15
HIKAL 205.35 103960 1688 3.94
INDOCO REMEDIES 330.30 139679 3044 12.35
JB CHEMICALS 371.95 301048 3155 4.91
MARKSANS PHARMA 54.85 5889339 2245 0.00
MOREPEN LAB 26.15 2848590 1176 0.00
NATCO PHARMA 619.75 177783 10794 12.75
NEULAND LAB 1002.40 18853 890 2.66
SHILPA MEDICARE 559.40 44833 4313 13.74
SUVEN 206.30 415372 Peer comparison on
2626 2.01
SYNGENE 487.70 154434 9754 4.52

Valuation and Investment

Marksan has good market liquidity thus entry and exit in the stock is easy.

Page 15 Source: Company, www.dynamiclevels.com

 Valuation and Investment

INSTRUMENT Price % Pledged Debt Equity Ratio (X) Int. Coverage Ratio (X)
AJANTA PHARMA 2074.9 5.04 0.06 122.16
BLISS GVS 148.45 0.00 0.24 9.87
DISHMAN 237.75 0.57 0.58 4.63
FDC 222.60 0.00 0.00 176.21
GRANULES 122.80 26.99 0.63 7.12
HIKAL 205.35 0.00 1.02 2.94
INDOCO REMEDIES 330.3 0.01 0.22 13.87
JB CHEMICALS 371.95 0.00 0.18 27.12
MARKSANS PHARMA 54.85 0.00 0.23 14.29
MOREPEN LAB 26.15 0.39 0.90 5.98
NATCO PHARMA 619.75 0.00 0.08 12.25
NEULAND LAB 1002.4 4.36 0.91 3.36
SHILPA MEDICARE 559.40 0.00 0.29 32.95
SUVEN 206.30 0.00 0.11 21.10
SYNGENE 487.70 0.00 0.85 43.32

Marksan Pharma has low debt to equity ratio, therefore company has good leverage
position.

Peer comparison on Profitability

INSTRUMENT Price P/E Ratio (X) PAT JUN' 16 PAT MAR' 16 PAT DEC' 15 PAT JUN' 15
AJANTA PHARMA 2074.90 42 119.55 106.31 111.30 83.84
BLISS GVS 148.45 24 27.44 13.31 21.37 19.97
DISHMAN 237.75 21 45.51 49.81 46.93 37.76
FDC 222.60 24 48.97 38.25 28.77 43.72
GRANULES 122.80 20 31.87 33.19 27.15 27.15
HIKAL 205.35 34 10.96 22.24 12.41 1.83
INDOCO REMEDIES 330.30 37 19.79 20.01 20.42 20.27
JB CHEMICALS 371.95 16 49.86 43.23 49.89 34.28
MARKSANS PHARMA 54.85 42 1.87 -3.95 18.66 32.34
MOREPEN LAB 26.15 68 4.01 2.77 7.28 2.50
NATCO PHARMA 619.75 62 47.43 60.45 36.67 27.54
NEULAND LAB 1002.40 31 9.71 6.63 6.28 7.30
SHILPA MEDICARE 559.40 41 24.14 38.03 24.88 15.76
SUVEN 206.30 24 32.58 32.29 17.72 20.23
SYNGENE 487.70 41 59.80 66.50 58.80 43.60

Shareholding Pattern
Because of low profitabity Marksans is trading at High PE but it will get better with increasing
profitability in future

Page 16 Source: Company, www.dynamiclevels.com

 Category & Name of the Shareholders No. of shareholder Total no. shares held %Holding
Promoter & Promoter Group 38 64218485 63.55
Indian 38 64218485 63.55
Public 35206 36831591 36.44
Institutions 104 13799115 13.65
Non Institution 35102 23032476 22.79
Grand Total 35244 101050076 99.99
Total 104 institutions hold position in Marksans with total holding of 13.65%

Category & Name of the Shareholders No. of shareholder Total no. shares held % Holding

Institutions 60 56376999 13.78

Mutual Funds 2 103003 0.03
Financial Institutions/ Banks 4 532741 0.13
Any Other (specify) 54 55741255 13.62
MONDRIAN EMERGING MARKETS SMALL CAP EQUITY FUNDL.P.
1 9324413 2.28

FOREIGN INSTITUTIONAL INVESTORS 54 55741255 13.62

CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
MANAGED BY WASATCH ADVISORS INC.
1 5226566 1.28

WASATCH EMERGING MARKETS SMALL CAP FUND 1 7951373 1.94

COMPANY PROFILE OF MARKSANS PHARMA, NSE, INDIA

Date of Incorporation 16-Apr-1992
Date of Listing 21-Jan-2002
Management
Name Designation
Mark Saldanha Chairman & Managing Director
Vinay Gopal Nayak Executive Director
Ajay S Joshi Independent Director
Naresh B Wadhwa Independent Director
Seetharama S Buddharaju Independent Director
Sandra Saldanha Whole Time Director

Registered Office Address

11th Floor, Grandeur,Veera Desai Extension Road,Oshiwara, Andheri (West),,400053,Mumbai,Maharashtra,India

Website
http://www.marksanspharma.com Investment Rationale

Page 17 Source: Company, www.dynamiclevels.com

Investment Rationale

Marksans Pharma Ltd. received an approval from the U.S. health regulator for an Abbreviated New Drug
Application (ANDA) for Loratadine Liquid Filled Capsules 10 mg on 25th Sep 2016.

Marksans R&D capabilities include dossier development, chemical synthesis, process optimization,
formulation development, analytical development and conducting stability studies.

Marksans have a team of over 50 experienced scientists specializing in formulation development and
analytical development.

The company has achieved global recognition within a very short span of time and has major global
expansion plans for the near future.

Companies key focus areas lie in the OTC & prescription drugs that have wide-ranging applications
across fields like Oncology, Gastroenterology, Antidiabetic, Antibiotics, Cardiovascular, Pain
Management, Gynaecology, among others.

Marksans Pharmas premier manufacturing and R&D facility is located at Goa, India. The formulation
plant is spread across an 18,000 square feet campus. The plant is a 100% EOU has been designed to
accommodate rapid future expansion.

Companys total expenditure has gone down drastically from Rs. 214.28 crs to Rs. 183.31 crs almost
14.45%.
Company has lower down its interest outgo.

From loss company has posted positive result. From Rs. -5.76 crs to Rs. 1.02 this can be turnaround for
the company.

Total 104 institutions hold position in Marksans with total holding of 13.65%

Marksans Pharma has fallen from Rs. 113.90 in Dec 2015 and came down to Rs. 33.50 in March 2016
after company failed to clear an inspection by the UK drug regulator. The company got a notice of
deficiency from UK MHRA. The inspection is about to over and result is expected to come positive.

We recommend BUY in Marksans Pharma @ 49 with the target of 70 in Long term

Page 18 Source: Company, www.dynamiclevels.com

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Page 19 Source: Company, www.dynamiclevels.com