Marksans Pharma (MARKSANS) Q1 25/26 earnings summary

Executive summary

• Q1 FY26 revenue grew 5% year-on-year to INR 626.2 crore, driven by new US launches and easing raw material costs, but profitability was impacted by one-time costs, integration expenses, and forex volatility.

• Four high-margin liquid products were launched in the UK to offset pricing pressures, and early signs of demand recovery are visible in Q2.

• Board approved unaudited consolidated and standalone financial results for the quarter ended June 30, 2025, with statutory auditors issuing an unmodified review opinion.

• Profitability was impacted by non-recurring factors: integration expenses, a one-time ECL provision in emerging market derivatives, and forex volatility.

• Strategic front-loading of US shipments ahead of tariff changes affected the working capital cycle, now at 159 days.

Financial highlights

• Operating revenue for Q1 FY26 was INR 626.2 crore (₹6,199.89 million), up 5% year-on-year; gross profit rose 8.9% to INR 358.2 crore; gross margin expanded to 57.8%.

• US and North America revenue grew 30.6% year-on-year to INR 327.6 crore, driven by new launches.

• UK and EU revenue was INR 203.8 crore; Australia and New Zealand INR 57 crore; Rest of World INR 31.6 crore.

• EBITDA was INR 100.1 crore; EBITDA margin declined to 16.1% due to higher employee costs and one-time provisions.

• Profit after tax was INR 58.2 crore, down 34.7% year-on-year; EPS at INR 1.3; cash from operations was INR 48.7 crore; CapEx at INR 37.8 crore; R&D spend at INR 12.1 crore (2% of revenue); cash balance of INR 711 crore as of June 30, 2025.

Outlook and guidance

• Early Q2 shows demand recovery, especially in US, UK, and Australia, with momentum expected to strengthen through the year.

• Gross margins expected to remain stable, with further improvement anticipated from Q3 as product mix and input costs optimize.

• Revenue for FY26 expected to be close to, but possibly shy of, INR 3,000 crore due to tariff uncertainties.

• UK and Europe business expected to be flattish; Australia and New Zealand to show nominal year-on-year growth.

• Strategic focus on scaling Goa facility, enhancing operational efficiency, and expanding product pipeline.