Exactly 5 years ago, if someone had said “ there is a share you can buy at Rs. 2 on 7th Feb 2012 and it will give you 19 times return in exactly 5 years” I would have put in all the money that I can lay my hands on in Marksans Pharma.
If you see the 5-year chart, this stock was trading at Rs. 2 in Feb 2012, rose to hit almost Rs. 115 (a return of almost 57 times), only to crash again and trade at Rs. 38 (for a return of 19 times).
The reasons for this are simple.
Marksans pharma was being looked at as an option only in 2013 when the pharma sector was re-rated and there was a boom in the investments in this sector. U can see all the pharma stocks – Aurobindo, Lupin, Natco, Dr. Reddys etc were looked upon as a defensive option to the volatile IT and other domestic consumption-oriented sectors.
Also, with the pedigree of Glenmark, it was assumed that Marksans also would become something similar. Hence, high valuations were given, P.E. ‘s went to all time high but the earnings didn’t materialize in the same manner.
Investors waited patiently, expecting that the EPS would pick up to justify the high growth in the stock price, but the revenues never happened as expected and the EPS didn’t zoom.
A Rs. 1 face value stock trading at Rs. 38 with an EPS of 0.54 is bad. It means currently the stock price is at Rs. 380 whereas at that price there are better companies like Cadila, Granules India, Suven Life, Dishman Pharma, Indoco remedies etc whose Net profit is in the range of Rs. 50 crore per year.
For a full list of all companies in this sector, check here:
On top of this Marksans has high exposure to the UK Pharma market and with UKMHRA imposing restrictions on the facility for production supply to the UK, the stock tanked. It tanked so hard that 20% down tick became a common thing for almost a week and finally it landed at Rs. 33
After quite a period of consolidation, it started moving up to go to Rs. 58, but again, no support from results or EPS increase. Hence it is languishing at that price.
Every quarter, investors and analysts expecting better performance from this company, give a higher rating, increase the price target etc but it has never lived up to its expectations. On top of it, there were rumors that the promoter has reduced their shareholding in this company (There were bulk deals from other investors: ) and there is no communication from the management on the actions needed to satisfy UKMHRA.
Unless it has some good things happening, Marksans Pharma Share Price can go nowhere.
These, I think are some of the points which can aid in the investor’s belief, get analysts support and rejuvenate the company’s growth onto a higher path. After that, all we need is to stay invested, to get multi-bagger returns, many folds.
Data Credits: Stock Screener for Indian Stocks: Screener.In,