Summary
Marksans Pharma Ltd. - Q3 FY26 Earnings Call Summary Friday, February 06, 2026, 04:00 pm
Event Participants
Executives 2 Jitendra Sharma (CFO), Mark Saldanha (Founder, Chairman and MD)
Analysts 8 Aditya Pal (MSA Capital), Ahmed (Unifi Capital), Deepesh Sancheti (Maanya Finance), Hitaindra Pradhan (Maximal Capital), Ishika (Perpetuity Ventures), Meet (Equirus PMS), Mihir (Fident AMC), Nirali Shah (Ashika Stock Services), Nitin Agarwal (DAM Capital), Riddhansh (Unifi AMC)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Revenue | ₹754.4 crores | +10.6% YoY; All-time high quarterly revenue driven by US volume and seasonal demand. |
| EBITDA | ₹160.7 crores | +23.2% YoY; Growth driven by operating leverage and improved cost efficiencies. |
| EBITDA Margin | 21.3% | +217 bps YoY; Significant expansion despite earlier Q1 weakness, supported by Teva facility scale-up. |
| Profit After Tax (PAT) | ₹113.7 crores | +8.2% YoY; Impacted slightly by higher employee costs and integration expenses. |
| Gross Margin | 58.1% | +184 bps YoY; Driven by softening raw material prices, favorable product mix, and FX benefits. |
| R&D Expenditure | ₹62 crores (9M) | 3.0% of revenue; Elevated spend due to aggressive filings in UK (4-5 products/month) and EU pipeline. |
| Cash Balance | ₹824.2 crores | Global cash position as of Dec 31, 2025; ~50% in India, 40% in UK, remainder in US/Australia. |
| Working Capital | 151 days | Remained steady compared to previous periods. |
Geographic & Segment Commentary
- US & North America: Revenue grew 16.9% YoY to ₹412.4 crores, contributing 53.8% of total 9M revenue. Growth was driven by robust volume execution and seasonal demand in cough, cold, and allergy segments. Management maintains a strong US order book of $220 million+.
- UK & Europe: Revenue stood at ₹258.2 crores, flat YoY due to persistent pricing pressure in the Rx segment. However, the business is stabilizing sequentially with multiple MHRA approvals (Mefenamic acid, Cetirizine) and favorable currency movements.
- Australia & New Zealand: Revenue grew significantly by 30.1% YoY to ₹61.4 crores. This segment remains a consistent contributor to the diversified regulated market strategy.
- Rest of World (RoW): Revenue was ₹22.4 crores; management remains cautious regarding this segment due to ongoing macroeconomic challenges in emerging markets.
Company-Specific & Strategic Commentary
- Teva Facility Integration: The Goa facility is currently at 50% utilization, contributing ₹560-600 crores to revenue. Management targets a ₹800 crore run-rate as product mix and capacity utilization improve.
- Global Expansion: Incorporated Marksans Europe Ltd (Ireland) and Marksans Canada Inc. to strengthen regulated market presence. Strategy in Canada focuses on 80% OTC, whereas Europe will be 90% Rx-driven.
- M&A Outlook: Management is in advanced dialogues for acquisitions in Europe to gain distribution platforms. They view 2026 as a “turning point” for European M&A activity.
- Product Pipeline: Filing 7-8 ANDAs annually in the US and upping UK filings to 4-5 per month. Focus is on niche, complex molecules and high-velocity OTC categories.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Milestone | ₹4,000 crores (FY28-FY29) | Target for the current portfolio in the next 2-3 years, followed by a ₹5,000 crore milestone. |
| US Growth | ~20% for FY27 | Driven by the $220M+ order book and commercialization of new awards (5-6 month lag). |
| EBITDA Margin | Sustaining ~21% levels | Expected to benefit from operating leverage as Teva facility utilization increases beyond 50%. |
| Employee Costs | Reduction in % to sales by Q2 FY27 | High current base due to Goa hiring; percentage will drop as revenue scales against fixed headcount. |
Risks & Constraints
| Risk | Context |
|---|---|
| Pricing Pressure | High single-digit price erosion in Rx segments (specifically UK/US) remains a headwind, though currently offset by new launches. |
| Employee Cost Inflation | Wage pressures and statutory changes (₹2.8 crore impact from new labor code) have elevated the cost base to 15% of revenue. |
| Geopolitical Uncertainty | While the US-China trade deal eased tariff concerns, management noted that 2025 was “weird” and volatile due to policy shifts. |
| Integration/Execution | Scaling the Teva facility and greenfield starts in Europe/Canada carry execution risks and potential margin dilution in the short term. |
Q&A Highlights
US Order Book Visibility
- Question: How does the $220 million order book translate to the P&L given current run rates? (Aditya Pal)
- Answer: There is a 5-6 month lag between winning an award and commercialization. The impact of the current order book will be visible starting Q1/Q2 of the next financial year (Mark Saldanha).
UK Business Stabilization
- Question: Is the stability in the UK sustainable after significant pricing pressure? (Nirali Shah)
- Answer: Growth is sustainable, supported by monthly new product approvals which help offset price erosion in the base Rx portfolio (Mark Saldanha).
European Strategy
- Question: Why lead with an Rx-heavy strategy in Europe compared to OTC in the US? (Nitin Agarwal)
- Answer: European markets are country-specific, often insurance-driven and tender-prone, making Rx the primary value driver over fragmented OTC retail (Mark Saldanha).
Capital Allocation
- Question: What is the expected net outgo for European acquisitions? (Mihir)
- Answer: Visibility will improve in 3-4 months. We are targeting companies with pan-European distribution, which command a premium (Mark Saldanha).
Key Takeaway
Marksans Pharma delivered a resilient Q3 FY26, achieving record quarterly revenue of ₹754.4 crores (+10.6% YoY) and significant EBITDA margin expansion to 21.3%. Growth was primarily spearheaded by the US market (up 16.9%) and recovery in the UK through new product launches despite persistent Rx price erosion. Strategically, the company is pivoting toward a larger European footprint via new subsidiaries in Ireland and Germany, while leveraging the Goa (Teva) facility which is currently at 50% utilization. Management has guided for a medium-term revenue milestone of ₹4,000 crores by FY28-29, supported by a robust $220 million US order book and aggressive R&D filings. While employee costs and R&D spend remain elevated at 15% and 3% of revenue respectively, operating leverage from increased capacity utilization is expected to improve profitability from Q2 FY27 onwards. Internal focus remains on executing the European M&A strategy to transition into a truly global pharmaceutical player.
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