Hold Marksans Pharma; target of Rs 31: Centrum Research
Centrum Research’s research report on Marksans Pharma
We downgrade Marksans Pharma (MPL) to Hold from Buy rating with a TP of Rs31 (earlier Rs55) based on 18x March’20E EPS of Rs1.7. MPL’s Q4FY18 results were lower than our expectations. The drug maker’s Q4FY18 revenue grew 8% YoY, EBIDTA margin declined by 200bps to 2.1% and net profit declined to Rs(65)mn YoY from Rs(33)mn. The Goa facility was approved by UK MHRA and TGA-Australia. We expect MPL’s performance to improve led by the recent launch of four new products in the US and expected approvals for softgel capsules from US FDA. Key positive trigger to our assumption includes stupendous growth in the US market and key negative risk includes regulatory issues for the Goa facility from US FDA.
We have revised our FY19E and FY20E EPS downwards by 41% and 43% respectively. We downgrade MPL to Hold from Buy rating, with a TP of Rs31 based on 18x March’20E EPS of Rs1.7, and a 10.2%% upside from CMP. Key positive upsides would be additional ANDA approvals from US FDA and key negative would be regulatory issue with US FDA for its Goa facility.
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