Marksans Pharma Limited — Q3 FY26 earnings call

Marksans Pharma reported a strong Q3 FY26, with operating revenue reaching an all-time high of INR 754.4 crores, marking a 10.6% year-on-year growth. This was supported by stable execution across geographies, a robust U.S. order book, and seasonal demand. Gross profit grew 14.3% YoY to INR 438.2 crores, with gross margin expanding by 184 basis points to 58.1%, primarily due to softening raw material prices and a favorable product mix. EBITDA increased 23.2% YoY to INR 160.7 crores, achieving a 21.3% margin, an expansion of 217 bps over Q3 FY25.

The U.S. and North American market was a key growth driver, with revenue increasing 16.9% YoY to INR 412.4 crores in Q3 FY26. The Australia and New Zealand market also showed robust growth of 30.1% YoY, reaching INR 61.4 crores. In contrast, the U.K. and EU formulation segment remained flat YoY at INR 258.2 crores, continuing to face persistent pricing pressures. The Rest of the World segment contributed INR 22.4 crores, with management maintaining a cautious outlook due to macroeconomic challenges^🌐.

The company is actively expanding its global footprint, having incorporated Marksans Europe Limited in Ireland and Marksans Canada Inc., and is exploring further expansions. In the U.K., the subsidiary Relonchem received MHRA market authorization for multiple products, including mefenamic acid tablets and cetirizine oral solutions. In the U.S., USFDA approval for amide hydrochloride was received, aligning with the strategy to enhance presence in high-velocity OTC categories like pain and allergy, GI, and cough and cold segments.

The Teva facility is currently trending to generate between INR 560 crores to INR 600 crores, with an objective to reach INR 800 crores. Management noted that the facility is visibly contributing to operating leverage, enhancing overall profitability. The product mix from this facility is expected to grow, further strengthening its contribution to the company's financial performance.

For the first nine months of FY26, the company generated INR 263.2 crores in cash from operations and invested INR 97 crores in capex. R&D investment stood at INR 62 crores during this period, representing 3% of consolidated revenue. Marksans Pharma maintains a debt-free status, with a healthy cash balance of INR 824.2 crores as of December 31, 2025, providing significant financial flexibility for future growth initiatives and strategic investments.

Employee costs saw an impact of INR 2.8 crores in Q3 FY26 due to new labor code accounting for gratuity and new pay. While annual increments and minimum wage increases across geographies exert pressure, management expects the employee cost percentage to sales to reduce by Q2 FY27 as capacity utilization at the Goa facility improves. This streamlining is anticipated to contribute positively to future margin expansion and overall profitability.

Marksans Pharma has set a next revenue milestone of INR 4,000 crores, which it aims to achieve within the next 2 to 3 years (FY28 or FY29) from its current portfolio. Beyond this, the company targets INR 5,000 crores. To accelerate growth, particularly in Europe, the company is actively exploring M&A opportunities, with expectations of better visibility on potential deals within the next 3-4 months and significant progress in 2026, which is seen as a turning point for European expansion.

The elevated R&D spend, projected to remain between 2.5% to 3% of revenue for FY27, is strategically directed towards aggressive filings in the U.K. and developing a portfolio for Europe, focusing on niche and complex molecules. In the U.S. market, management believes the recent growth deceleration in 2025 was temporary due to geopolitical uncertainties and tariff issues. With the trade deal signed, they are optimistic for a return to normal growth rates in the upcoming financial year.