Marksans Pharma Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Marksans Pharma reported a strong Q2 FY26, with revenue growing 16% sequentially to ₹720.4 crores and PAT increasing 70% QoQ to ₹99.1 crores. EBITDA margin expanded to 20.1% driven by operational efficiencies. The company saw robust growth in the US and UK markets, with new product launches and regulatory approvals. Management expressed confidence in sustaining momentum, targeting significant revenue growth and margin stability in the coming years, while also planning strategic capacity expansions and European market entry.

Highlights

  • Q2 FY26 revenue grew 16% sequentially to ₹720.4 crores, driven by improved demand across key markets and operational execution.

  • EBITDA and PAT grew 44% and 70% quarter-on-quarter, respectively, supported by operating leverage and improved cost efficiencies, with EBITDA margin reaching 20.1%.

  • US & North America business delivered robust performance, with revenue growing 27% YoY to ₹387 crores, aided by new launches in digestive health and pain management.

  • UK subsidiary Relonchem received three new marketing authorizations from U.K. MHRA, strengthening the product portfolio.

  • Unit 2 facility in Verna, Goa, successfully completed a U.S. FDA inspection with zero form 483 observations, reaffirming strong compliance standards.

Concerns

  • Gross margin for Q2 FY26 was 57.2%, a decrease from 59.7% last year, primarily reflecting product mix and pricing pressure in the UK.

  • EBITDA margin for H1 FY26 stood at 18.2%, a decrease from 21.4% in H1 FY25, mainly due to increased employee expenses from headcount additions at the acquired Goa facility.

  • Working capital cycle remains elevated at 150 days (vs target 120-130 days) due to conscious inventory build-up amidst past tariff uncertainties.

Key financials

2 periods

Headline

  • Revenue
    ₹720.4 Cr
    YoY +12.2% QoQ +16%
  • Gross Profit
    ₹411.8 Cr
    YoY +7.4%
  • Gross Margin
    57.2%
  • EBITDA
    ₹144.5 Cr
  • EBITDA Margin
    20.1%
  • PAT
    ₹99.1 Cr
    YoY +1.4% QoQ +70%
  • EPS
    ₹2.2

H1

  • Revenue
    ₹1,340.4 Cr
    YoY +8.8%
  • EBITDA Margin
    18.2%
  • R&D Spend
    ₹26.2 Cr

What they filed

Q1 FY27: revenue up 35.6%, net profit up 174.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue642 682 708 620 720 +12%754 +11%856 +21%841 +36%
EBITDA147 139 127 100 144 −2%161 +16%195 +54%213 +113%
Net profit98 105 91 58 99 +1%114 +9%149 +64%159 +174%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹719.8 Cr Total
  • US & North America ₹387 Cr 53.8%
  • UK & EU ₹245 Cr 34.0%
  • Australia & New Zealand ₹61.3 Cr 8.5%
  • Rest of World ₹26.5 Cr 3.7%

Order book

high confidence

Total value

$225 Mn

as of 2025-11-14 range

The order book is strong and Unit 2 is progressing, expected to gain momentum in 2026.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹100 Cr
    • Capacity expansion for tablets (2.5x) and soft gels (3x) at old plant ₹100 Cr
    But this project we will undertake in 2026 from a CAPEX point of view. And we would have to spend a bit of CAPEX to look at us, to take us beyond 4,000 crores... we are budgeting about 100 crores onto that CAPEX, that we will basically move forward once all the straight deals of India and everything is put in place.
  • Debt Gross ₹0 Cr · Net cash ₹666.5 Cr
    We continue to remain debt-free and the cash balance stood at Rs. 666.5 crore as of 30 September of 2025.
  • M&A Smaller M&As across Europe Acquisition · Pending regulatory

    Expand European footprint

    we are looking at smaller M&As across Europe to be concluded in '26.
  • Liquidity Cash ₹666.5 Cr
    We continue to remain debt-free and the cash balance stood at Rs. 666.5 crore as of 30 September of 2025.

Guidance & targets

Revenue

  • UK Revenue Growth Revenue · next 5-7 years · High confidence double
    Our goal to double U.K. revenues over the next 5 to 7 years remain firmly on track.

    — Mark Saldanha

  • US Revenue Target Revenue · next 3 years · High confidence $300 million
    We are still targeting 300 million in a three years.

    — Mark Saldanha

  • Overall Revenue Target Revenue · FY30 · High confidence ₹5,000 crores
    so by FY'30, we should expect around 5,000 crores of revenues. That's fair to say.

    — Mark Saldanha

Business Outlook

  • UK Business Performance Business Outlook · Calendar Year 2026 · High confidence better 2026 than 2025
    I do believe Q3 will be better than Q2 for UK. And there on, I think we will see a better 2026 than 2025 for UK.

    — Mark Saldanha

Margin

  • EBITDA Margin Margin · FY26 · High confidence 19% to 20%
    Yes, it's very, very reasonable and fair to assume that. And it may be slightly better, but try to assume that, yes. North of 20%? Yes, North of 20%. But I mean, from a safe point of view, 19% to 20%, this is very reasonable.

    — Mark Saldanha

Working Capital

  • Working Capital Cycle Working Capital · next 2-3 quarters · High confidence 120-130 days
    I think in next two to three quarters, it should come back to 120-130 days.

    — Jitendra Sharma

Capacity

  • Tablet Manufacturing Capacity Capacity · end of 2026 · High confidence 1.2 to 1.3 billion tablets

    From 700-800 million tablets today

    So we are looking at 1.3 billion of tablets, and then we are looking at probably 3x the capacity of our soft gel being enhanced out there. ... So we do see once we put in that CAPEX our capacity going up from 700 million to 800 million to 1.3 billion tablets.

    — Mark Saldanha

  • Soft Gel Manufacturing Capacity Capacity · end of 2026 · High confidence 3x current capacity
    we are looking at probably 3x the capacity of our soft gel being enhanced out there.

    — Mark Saldanha

What to watch in Q3 FY26

UK Business Performance

next quarter
Current Q2 FY26 stable with demand improvement
Target Q3 FY26 better than Q2 FY26

Why it matters

Indicates the trajectory of recovery and growth in a key market for Marksans.

I do believe Q3 will be better than Q2 for UK.

Risks & concerns

  • UK Pricing Pressure

    medium

    Ongoing pricing pressure in the UK market, impacting gross margins.

    Management acknowledged

  • Geopolitical Issues

    medium

    Geopolitical issues create uncertainty, causing management to be cautious about aggressive growth targets for the US.

    Management acknowledged

  • Inflation and Recessionary Trends

    low

    General macro-economic concerns that companies try to avoid.

    Management acknowledged

Q&A highlights

8 direct
US Orderbook, Unit 2 Utilization, and New Product Launches Direct
Our orderbook right now stands at between $225 to $230 million, so that's quite strong. And our unit 2 is progressing. We are very close to Rs. 500 crores in terms of revenue based on our last two months statistics. The order book from unit 2 will basically now take momentum as the U.S. FDA and everything has been cleared. So it will grow in 2026.

Provides specific order book value and timeline for Unit 2's contribution to revenue growth.

Asked by Ahmed

Europe Market Entry Strategy (Organic vs. Inorganic) Direct
So Europe, basically, we are looking at expanding our geographies. And we have been looking for M&As. But we have actually started our operations in Germany. We are focused on four countries in Europe, prima facie. And in 2026, we would get our operations started, either organically or inorganically in these four countries. Germany, we have not managed to close an acquisition. We have decided to enter the market through organic route.

Clarifies the company's approach to European expansion, including specific countries and timelines.

Asked by Ahmed

Capacity Expansion and Associated CAPEX Direct
So we do see once we put in that CAPEX our capacity going up from 700 million to 800 million to 1.3 billion tablets. So that will be a substantial growth in our capacity from a tablet point of view. But our soft gel will double, if not triple our capacity by doing this within the same CAPEX because it will again free space. So that will again give us a substantial drive. But we are going to put in the CAPEX somewhere in 2026. We are budgeting about 100 crores onto that CAPEX.

Details specific capacity targets for tablets and soft gels, along with the planned CAPEX amount and timeline.

Asked by Aditya Pal

Impact of US Tariff Clarity on Market Sentiment Direct
I must emphasize that that clarity has emerged. The uncertainty has diluted to a great level because the current administration has made it clear that pharma tariffs are not going to come, tariffs are not going to be put on pharmaceutical products. ... I think that has been put to rest and clarity has emerged that pharma will not come into the tariffs. ... I think the worst is behind us where that is concerned.

Addresses a significant past concern for the pharma sector, indicating a more stable business environment.

Asked by Deepesh

Working Capital Cycle Improvement Direct
We should. But we consciously built up because of this uncertainty of tariffs. So, we consciously took a call of being very heavy on our inventory, on our stock holdings, so that in case things go south, we at least have enough of inventory to sustain till we take proactive actions to meet the new world or the new requirement, you can say it. ... I think in next two to three quarters, it should come back to 120-130 days.

Explains the reason for elevated working capital and provides a timeline for its normalization.

Asked by Deepesh

UK Business Performance Trajectory Direct
Q1 was a one-off, you can put it that way. Q2, we are back on schedule, like you said, and Q3 will be better than Q2. I can tell you that for certain. Again, Q4 will be more seasonal, where you can't compare it compared to Q3. But we are back on track and moving forward with all these new approvals coming in place. ... I do believe Q3 will be better than Q2 for UK. And there on, I think we will see a better 2026 than 2025 for UK.

Provides a clear outlook for the UK business, confirming Q1 as an anomaly and projecting improvement for subsequent quarters and the next year.

Asked by Nitin Agrawal

US Growth Drivers (Existing vs. New Approvals) Direct
Both. We are still filing products. We are getting approvals. The Teva approval, the USFDA approval is strengthening our foundation. ... So yes, we are expecting approvals from the new plans also to come in in '26. So technically, it's a basket of newer products and obviously new accounts coming into it.

Clarifies that US growth will be a combination of existing product traction and new approvals, including those from recently acquired facilities.

Asked by Nitin Agrawal

US Private Label OTC Market Size and Marksans' Share Direct
The size would be a couple of billion dollars, because you have the largest player, which is Perrigo, which is probably doing around $1.8 to $2 billion in the private label. Then you have PLD which is doing about $700 million, LNK doing about $400 million. So we are running amongst the top four players in the US market, but we are still far away from the leader.

Provides context on the competitive landscape and Marksans' position in the significant US private label OTC market.

Asked by Sriram

3 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance and H1 Overview

Marksans Pharma reported a strong Q2 FY26, with operating revenue growing 16% sequentially to ₹720.4 crores, a 12.2% increase year-on-year. This recovery follows a softer Q1, driven by improved demand and operational execution. Profitability also saw significant improvement, with EBITDA growing 44% QoQ and PAT increasing 70% QoQ to ₹99.1 crores, resulting in an EBITDA margin of 20.1%. For the first half of FY26, operating revenue stood at ₹1,340.4 crores, an 8.8% YoY increase, with an EBITDA margin of 18.2% and PAT of ₹157.3 crores. R&D spend for H1 FY26 was ₹26.2 crores, representing 2% of consolidated revenue.

Geographical Market Performance and Outlook

The US & North America market delivered robust performance in Q2 FY26, with revenue growing 27% YoY to ₹387 crores, supported by new launches in digestive health and pain management. The UK business showed stable results and improved demand, with its subsidiary Relonchem receiving three new marketing authorizations from U.K. MHRA. Management aims to double UK revenues over the next 5 to 7 years and expects a 'better 2026 than 2025' for the UK. European expansion is underway, with organic operations starting in Germany in 2026, focusing on four key countries, and exploring smaller M&As across Europe.

Capacity Expansion and Future CAPEX Plans

The company's current tablet manufacturing capacity at its old plant is 700-800 million units per month. Marksans plans to expand this to 1.2-1.3 billion tablets and triple its soft gel capacity. This expansion project is slated for 2026, with a budgeted CAPEX of approximately ₹100 crores. The company's Unit 2 facility in Verna, Goa, recently completed a US FDA inspection with zero form 483 observations, strengthening its manufacturing foundation and supporting future growth.

US Tariff Clarity and Market Sentiment

Management confirmed that the uncertainty surrounding US pharma tariffs has largely dissipated, with clarity emerging that pharmaceutical products will not be subject to tariffs. This resolution has improved business sentiment, leading to increased traction with clients. While past geopolitical issues and inflation concerns had caused some hesitation, the company believes the worst is behind them regarding tariff-related disruptions, allowing for a clearer focus on growth.

Working Capital Management and Inventory Strategy

The working capital cycle for H1 FY26 stood at 150 days, which is higher than the average target of 120-130 days. This was a conscious decision to build up inventory due to past uncertainties related to tariffs, ensuring sufficient stock holdings. Management expects further improvement in the coming quarters, with the working capital cycle projected to return to the 120-130 day range within the next two to three quarters as tariff-related disruptions ease and inventory normalizes.

Profitability Outlook and Margin Targets

EBITDA and PAT grew significantly quarter-on-quarter, driven by operating leverage and improved cost efficiencies. Despite some gross margin compression due to product mix and UK pricing pressure, the company achieved a 20.1% EBITDA margin in Q2 FY26. For the full fiscal year 2026, Marksans Pharma is guiding for an EBITDA margin in the 19% to 20% band, with potential for it to be slightly higher, reflecting confidence in sustained profitability through growth and operational discipline.

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