Mukul Agrawal Stocks: Small-cap pharma share zooms 18% - Know what’s fuelling the rally; Brokerage sees 86% upside

Renowned investor Mukul Agrawal-backed small-cap pharma company  Marksans Pharma shares jumped over 18 per cent to touch the day’s high level of Rs 51 per share on the BSE intraday trade during Tuesday’s trading session. The rally comes ahead of the company's plans to take up share buyback in its July 8 board meeting. 

“A meeting of the Board of Directors of the Company is scheduled to be held on Friday, 8th July 2022 to consider the proposal for buyback of fully paid up equity shares of the Company upto such amount of the aggregate of Company's paid up equity share capital and free reserves as the Board may decide in accordance with the provisions of SEBI,” Marksans Pharma said in filing to exchanges. 

Mukul Agrawal holds 5,000,000 equity shares, which translates to 1.2 per cent stakes in Marksans Pharma, as per the latest shareholding pattern of the company available on the BSE.  

The ace investor publicly holds 51 stocks with a net worth of over Rs 2,275.4 crore as of July 5, 2022, according to stock analysis website trendlyne.com. 

“The company is concentrating on major regulated markets of US/UK with focus on higher margin soft gels & OTC (over-the-counter) products, Also, its strong balance sheet will help inorganic growth through acquisitions of ANDAs, product licenses and capacity expansion,” Arihant Capital said.  

The margin pressure which was visible in the latter half of FY22 due to cost inflation, is expected to stabilize around current levels, the brokerage said, adding that operating margins can expand going forward with focus on backward integration 

Arihant Capital value Marksans Pharma on both the parameters EV/EBITDA (7x FY24E) and PE valuation of 10x of FY24E EPS. It maintained a Buy rating with revised target price of Rs 80 per share, which implies 86 per cent upside in the stock.  

Marksans Pharma is engaged in research, manufacturing and marketing of generic pharmaceutical formulations and its key focus area includes OTC and prescription (Rx) drugs.