Shares of Marksans Pharma have been on a downtrend since the start of the year. In the last 30 days, the stock has called around 11%, but analysts at Ventura are optimistic about the company’s growth prospects.

The Marksans Pharma Analyst: Ventura analysts re-initiated coverage on the stock with a “buy” rating and a price target of ₹301. The 24-month target indicates an around 115% upside from the stock’s current market price of ₹141.

The Marksans Pharma Thesis: In the first nine months of FY24, the pharma company has demonstrated robust revenue growth of 15.8% year-over-year in the US markets, positioning itself to achieve $100 million (₹820 crore) in sales for the year. With a diverse product portfolio comprising more than 100 SKU’s (stock keeping units) and an existing order book of $170 million (around ₹1,400 crore), coupled with expanding manufacturing capabilities through partnerships like Teva, the company is poised to achieve its targeted two-fold increase in revenues over the forecast period, the analysts added.

As per the brokerage firm, this growth is propelled by MPL’s strategic initiatives, including capitalizing on its established presence in over-the-counter (OTC) markets by offering cost-effective products to private labels and increasing market penetration through strategic partnerships with major grocery stores and pharmacies. The analysts anticipate US sales to scale up to ₹2,030 crore by FY27, concurrently improving revenue share to approximately 52% from the current 43.9%.

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Talking about the UK market, the analyst remarked that the company has witnessed significant revenue growth of 26.5% year-over-year in 9MFY24, reaching ₹710 crore. Despite being a prominent player in the generic pharmaceutical segment, MPL’s market share in the UK remains low, providing ample room for growth. With a wide range of product offerings, including over 160 prescription products and strong offerings in OTC, combined with the largest product pipeline, the analysts expect the pharma major to sustain the growth trajectory.

Despite facing competition from peers in developed markets, MPL’s ability to offer competitive prices by manufacturing at a low cost provides a significant advantage, contributing to the maintenance and expansion of its market share.

MPL’s strategic approach, focusing on cost-effectiveness and a diverse product range within the OTC segment, drives growth through increased volumes. This strategic shift is evident in the significant transition in revenue share from OTC to prescription products, shifting from 55:45 in FY20 to 74:26 in FY23. For all these reasons, the analysts said that despite the over 100% rally in the stock in the past year, they still think it has some steam left.

Price Action: Marksans Pharma’s share price was down 2.75% to trade at ₹141.60 in the mid-market hours on Monday.

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