Marksans Pharma Ltd-Q3FY21 Analysis

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Q3FY21 was the best ever quarter in terms of both revenue and profitability, much like all other companies.

In terms of revenue, while the quarter on quarter sales growth was very marginal but YoY growth was impressive at 24.5%.

Now, coming to Marksans’ gross margin has been continuously improving with the current quarter standing at more than 60%.

In Q2FY21, there was an depreciation amount of ₹18.9 cr compared to ₹7cr in Q1FY21. On more than doubling of depreciation expenses, there should be a substantial increase in Fixed asset which increased from ₹220cr to ₹233cr, an increase of just  ₹13cr. Depreciation on the minor increase would not be enough. But when you look at the Intangible assets, the value has declined from ₹82.6cr to ₹69.8cr.

So, basically the increase in deprecation cost is actually amortization of its intangible assets. 

On asking the company about the specific reason for the same, I got the below response:

“Marksans had licenses in UK which were yet to be commercialized and amortizing of carrying value in the balance sheet was being done at normal run rate. During Q2FY21 Marksans team in UK took a call that these licenses need accelerated rate of amortization. This was done in Q2FY21 as a one off and hence depreciation and amortization is back to normal in Q3FY21.”

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Shekhar Yadav

Shekhar Yadav

It was only during the third semester in Engineering that Shekhar overheard a Gujarati guy in his class discussing stocks. After a few discussions with him, he realized that this was what he wanted to do in his life.
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