Hi,
IDFC Securities has released a report on Marksans Pharma, appended is the brief summary of the same.
Kindly click here to download the report : Marksans Pharma - Aug16 (RN).pdf
Marksans Pharma (CMP: Rs46) |
Mkt Cap: Rs18.8bn; US$281m Bloomberg code (MRKS IN) |
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Q1FY17 result highlights · Revenues declined 11% yoy (down 11% qoq) to Rs1.87bn (est, Rs2.2bn) US revenues were lower at Rs793m vs est Rs900m. Management attributed it to supply disruptions due on-going remediation measures and challenges in transitioning to own front end from 3rd party distributors. EU sales (Rs761mn vs est Rs 800m) missed est due to increased pricing pressure and adverse currency movement. · EBITDA declined sharply to Rs82m vs est Rs300m as the negative operating leverage with reduced revenues played out. Management cited that they have sharply reduced output from Goa facility (current capacity utilization ~50%) as they thoroughly overhaul quality systems and process in response to the MHRA observations. As the remediation measures are nearing closure, revenues should gradually begin to scale-up from Q2 onwards. · PAT came at Rs10m well below our estimate of Rs139m Key positives: None Key negatives: Lower revenues across geographies; lower gross profits. Impact on financials: We have reduced our FY17/18 EPS to 1.1 / 3.3 Valuations & view MPL's revenue / earning deterioration has been far more severe and prolonged than the management guidance over the last few quarters. While the challenges emerging from remediation measures will likely get fixed over next couple of quarters, MPL faces significant business challenges going forward. On-going GBP weakness post Brexit has further compounded the challenges emerging from the sharp price erosion in UK. Given the severity of UK market issues, a sharp recovery in US revenues driven by new soft gel ANDA approvals and abatement of supply disruptions on account distribution changes remains the sole driver to MPL's earnings outlook. Maintain Outperformer. MPL's inability to resolve regulatory issues and to obtain new ANDA approvals in US, over next 1-2 quarters remains key risk to our call. |
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To read report click here: Marksans Pharma - Aug16 (RN).pdf |
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