Marksans Pharma's profitability margins contracted in Q2FY16

Marksans Pharma (MPL) recently declared its Q2FY16 results. The company's revenue increased by 20.28 per cent to Rs 255.54 crore in Q2FY16 as compared to previous quarter. Its total expenditure increased by 27.57 per cent to Rs 204 crore in Q2FY16 on quarterly basis. MPL's total expenditure increased predominantly due to a 32.52 per cent increment in raw material prices during the quarter.

MPL's EBITDA reduced by 1.98 per cent to Rs 51.37 crore in Q2FY16 as compared to the previous quarter. The company's EBITDA margin contracted by 457 basis points to 20.1 per cent in Q2FY16 on quarterly basis. However, its net profit increased by 10.77 per cent to Rs 34.86 crore in Q2FY16 on quarterly basis as tax expense reduced by 41.69 per cent to Rs 7.33 crore during the quarter. MPL's net profit margin contracted by 117 basis points to 13.64 per cent in Q2FY16 on quarterly basis.

On yearly basis, the revenue of the MPL increased by 21.37 per cent to Rs 255.54 crore in Q2FY16 as compared to same period in previous financial year. The company's total expenditure rose by 32.92 per cent to Rs 96.7 crore in Q2FY16 on yearly basis. Its EBITDA increased by just 0.82 per cent to Rs 51.37 crore in Q2FY16 as compared to same period in previous fiscal year. MPL's net profit increased by 11.97 per cent to Rs 34.86 core in Q2FY16 on yearly basis because of 40.08 per cent reduction in interest expense and 30.52 per cent reduction in tax expense during the quarter.

Considering geographical segment revenue, MPL's US & North America formulation business grew by 107.2 per cent to Rs 157.552 crore from Rs 76.040 crore during H1FY16.US revenue contributed 33.66 per cent of the revenue.The company's Europe and UK formulation contributed 51.99 per cent of the revenue. Its Australia & New Zealand business increased by 10.01 per cent to Rs 45.218 crore in H1FY16. MPL's rest of the world constituted remaining 4.34 per cent of the revenue during H1FY16.

MPL's shareholding pattern indicates that FII holdings expanded by 68 basis points to 15.22 per cent while DII holdings contracted by 11 basis points to 0.22 per cent during September 2015 quarter. The share price of the company declined by 2.37 per cent on bourses in early trades and is trading at Rs 97 on intraday basis.

MPL is a pharmaceutical company, which is engaged in the research, manufacturing and marketing of generic pharmaceutical formulations. The Company manufactures products for segments, such as pain management, cough and cold, diabetes, cardiovascular, central nervous system, antibiotics, gastrointestinal, anti-allergic and oncology. It is engaged in research and development, and offers contract research and manufacturing services to global pharmaceutical companies. MPL has a manufacturing facility for oral solids and soft gelatin capsules in Goa, India, a manufacturing facility for liquids/ointments/sachets at Southport, the United Kingdom, and a solid oral dosage manufacturing facility in New York, the United States. It supplies products to more than 25 countries.