Marksans Pharma reports 262% CAPEX growth in 2016 and 12.1% Revenue growth
30-05-2016 • About Marksans Pharma (
$MARKSANS) • By InTwits
Marksans Pharma reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Marksans Pharma is a fast growth stock: FY2016 revenue growth was 12.1%, 5 year revenue CAGR was 24.0% at FY2016 ROIC 20.6%
- EBITDA Margin is quite volatile: 15.3% in FY2016, 23.2% in FY2015, 18.1% in FY2014, 15.0% in FY2013, -27.2% in FY2012
- Marksans Pharma has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: ₹1,319m in FY2016, ₹365m in FY2015, ₹52m in FY2014, ₹64m in FY2013, ₹53m in FY2012
- The company has highly profitable business model: ROIC is 20.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.4x while industry average is -0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 12.1%. During the last 5 years Revenue growth topped in FY2014 at 43.3% and was decelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 8.0 pp from 23.2% to 15.3% in FY2016. During the last 5 years EBITDA Margin topped in FY2015 at 23.2%.
Net Income margin decreased on 4.9 pp from 13.7% to 8.8% in FY2016. During FY2012-FY2016 Net Income margin topped in FY2015 at 13.7%.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 14.8%. The company showed fast CAPEX/Revenue growth of 13.3 pp from 1.5% in FY2013 to 14.8% in FY2016. Average CAPEX/Revenue for the last three years was 6.7%. The company invested a big chunk of EBITDA (96.8%) to CAPEX to secure its growth. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2014 at 0.83% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (20.6%) while ROE is a bit lower (19.4%). ROIC dropped on 20.5 pp from 41.2% to 20.6% in FY2016. ROE dropped on 24.7 pp from 44.1% to 19.4% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 0.6x. Net Debt / EBITDA surged on 0.9x from -0.6x to 0.4x in FY2016. Debt increased on 6.9% while cash dropped on 81.0%.
Marksans Pharma has short term refinancing risk: cash is only 39.9% of short term debt.
Valuation and dividends
Marksans Pharma's trades at EV/EBITDA 13.7x and P/E 23.1x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 425.1x with the industry average at 22.8x.
Financial and operational results
Marksans Pharma ($MARKSANS) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,555 | 4,384 | 6,285 | 7,967 | 8,933 | 12.1% |
| EBITDA | -968 | 659 | 1,140 | 1,849 | 1,363 | -26.3% |
| Net Income | -1,788 | 459 | 719 | 1,094 | 785 | -28.2% |
Balance Sheet
|
|---|
| Cash | 221 | 155 | 467 | 1,851 | 351 | -81.0% |
| Short Term Debt | 1,636 | 1,549 | 1,399 | 822 | 879 | 6.9% |
| Long Term Debt | 152 | 79 | 198 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 53 | 64 | 52 | 365 | 1,319 | 261.6% |
Ratios
|
|---|
| Revenue growth | 16.7% | 23.3% | 43.3% | 26.8% | 12.1% | |
| EBITDA growth | 28.7% | -168.1% | 72.9% | 62.2% | -26.3% | |
|
|---|
| EBITDA Margin | -27.2% | 15.0% | 18.1% | 23.2% | 15.3% | -8.0% |
| Net Income Margin | -50.3% | 10.5% | 11.4% | 13.7% | 8.8% | -4.9% |
| CAPEX, % of revenue | 1.5% | 1.5% | 0.8% | 4.6% | 14.8% | 10.2% |
|
|---|
| ROIC | -142.4% | 34.9% | 33.8% | 41.2% | 20.6% | -20.5% |
| ROE | | | 71.3% | 44.1% | 19.4% | -24.7% |
| Net Debt/EBITDA | | 2.2x | 1.0x | -0.6x | 0.4x | 0.9x |
Peers in Pharmaceuticals
Below you can find Marksans Pharma benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | - | 3.7% | 22.6% | 10.4% | 53.1% |
| Lincoln Pharmaceuticals ($LINCOPH) | - | 3.8% | 8.5% | 25.9% | 50.4% |
| Torrent Pharmaceuticals ($TORNTPHARM) | - | 17.7% | 32.2% | 13.6% | 42.4% |
| Natco Pharma ($NATCOPHARM) | - | 26.1% | 11.9% | 11.7% | 38.3% |
| Mangalam Drugs & Organics ($MANGALAM) | - | -18.2% | -2.1% | 79.8% | 33.7% |
| |
|---|
| Median (33 companies) | 27.7% | 14.7% | 12.6% | 8.6% | 11.0% |
|---|
| Marksans Pharma ($MARKSANS) | - | 23.3% | 43.3% | 26.8% | 12.1% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | - | 52.1% | 57.4% | 57.6% | 59.6% |
| Omega Laboratories ($OMEGALAB) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 46.9% | 26.1% | 28.7% | 28.8% | 29.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 37.2% | 38.2% | 40.2% | 37.4% | 37.5% |
| Hester Biosciences ($HESTERBIO) | - | - | - | 32.9% | - |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 40.8% | 44.3% | 44.9% | 29.2% | 30.6% |
| Natco Pharma ($NATCOPHARM) | 21.5% | 23.2% | 24.9% | 26.2% | 24.1% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 25.8% | 22.9% | 25.1% | 23.2% | 25.8% |
| |
|---|
| Median (53 companies) | 12.9% | 12.8% | 14.3% | 12.0% | 16.1% |
|---|
| Marksans Pharma ($MARKSANS) | -27.2% | 15.0% | 18.1% | 23.2% | 15.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| J.B.Chemicals & Pharmaceuticals ($JBCHEPHARM) | 10.0% | 5.8% | 6.0% | 6.2% | 15.9% |
| Claris Lifesciences ($CLARIS) | 58.1% | 42.9% | - | 103.1% | 15.8% |
| Natco Pharma ($NATCOPHARM) | 24.4% | 16.3% | 14.4% | 14.1% | 13.8% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 8.9% | 7.5% | 5.7% | 8.6% | 12.2% |
| Glenmark Pharmaceuticals ($GLENMARK) | 7.1% | 9.4% | 6.3% | 8.2% | 11.7% |
| |
|---|
| Median (26 companies) | 8.2% | 8.3% | 5.8% | 6.2% | 8.2% |
|---|
| Marksans Pharma ($MARKSANS) | 1.5% | 1.5% | 0.8% | 4.6% | 14.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | 27.5% | 29.1% | 41.5% | 35.7% | 62.1% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 26.4% | 30.5% | 33.2% | 19.7% | 44.2% |
| Abbott India ($ABBOTINDIA) | 29.6% | 26.9% | 30.5% | 34.2% | 34.1% |
| Divi'S Laboratories ($DIVISLAB) | 30.6% | 30.4% | 32.3% | 30.5% | 31.9% |
| Jenburkt Pharmaceuticals ($JENBURPH) | 34.1% | 29.0% | 32.4% | 35.3% | 31.4% |
| |
|---|
| Median (56 companies) | 14.0% | 13.0% | 14.4% | 13.0% | 15.9% |
|---|
| Marksans Pharma ($MARKSANS) | -142.4% | 34.9% | 33.8% | 41.2% | 20.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 3.5x | 3.5x | 6.4x | 3.2x |
| Claris Lifesciences ($CLARIS) | 1.9x | 1.1x | 1.8x | 3.2x | 2.9x |
| Themis Medicare ($THEMISMED) | - | 7.9x | 0.0x | 0.0x | 2.9x |
| Glenmark Pharmaceuticals ($GLENMARK) | 2.7x | 2.1x | 2.2x | 2.5x | 2.2x |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.6x | 2.6x | 2.3x | 2.9x | 2.1x |
| |
|---|
| Median (40 companies) | 1.6x | 1.3x | 0.2x | 0.2x | 0.1x |
|---|
| Marksans Pharma ($MARKSANS) | - | 2.2x | 1.0x | -0.6x | 0.4x |
