Marksans Pharma Ltd Valuation Shifts to Fair Amidst Sector Comparisons

Valuation Metrics and Recent Grade Change

On 7 July 2025, Marksans Pharma’s Mojo Grade was downgraded from Hold to Sell, with the latest Mojo Score standing at 47.0. This downgrade coincides with a reclassification of the company’s valuation grade from expensive to fair, signalling a more balanced price level relative to its earnings and book value. The current P/E ratio is 22.89, a significant moderation compared to many of its pharmaceutical peers, which remain in the expensive or very expensive categories.

The price-to-book value ratio is 3.07, indicating that the stock trades at just over three times its book value. While this is not low by absolute standards, it is more reasonable than some peers such as Wockhardt, which trades at a P/E of 176.5 and an EV/EBITDA multiple of 49.16, or Astrazeneca Pharma with a P/E of 105.75. Marksans’ EV/EBITDA stands at 14.86, further underscoring its relatively fair valuation in the current market context.

Comparative Peer Analysis

When compared with key competitors in the Pharmaceuticals & Biotechnology sector, Marksans Pharma’s valuation appears more attractive. For instance, Ajanta Pharma and Emcure Pharma are classified as expensive, with P/E ratios of 35.87 and 30.81 respectively. J B Chemicals & Pharmaceuticals and Gland Pharma are considered very expensive, with P/E ratios exceeding 33.9 and EV/EBITDA multiples above 18.3.

Pfizer and Sai Life Sciences also fall into the very expensive category, with P/E ratios of 30.21 and 57.05 respectively. This contrast highlights that Marksans’ current valuation offers a comparatively more accessible entry point for investors seeking exposure to the pharmaceutical sector without the premium multiples demanded by larger or more established peers.

Financial Performance and Returns Context

Marksans Pharma’s return profile over various time horizons presents a mixed but generally positive picture. The stock has outperformed the Sensex significantly over the medium to long term, with a 3-year return of 175.13% compared to the Sensex’s 36.73%, and a 5-year return of 219.86% versus the Sensex’s 60.30%. Over a decade, the stock has delivered a 279.17% return, slightly ahead of the Sensex’s 259.46%.

However, the recent 1-year return of -26.91% contrasts sharply with the Sensex’s positive 8.52%, reflecting sector-specific headwinds and company-specific challenges. Year-to-date, the stock has marginally outperformed the benchmark with a 1.03% gain against the Sensex’s -3.04%. This volatility underscores the importance of valuation reassessment as investors weigh future growth prospects against current price levels.

Profitability and Efficiency Metrics

Marksans Pharma’s latest return on capital employed (ROCE) stands at 17.72%, while return on equity (ROE) is 13.08%. These figures indicate a solid operational efficiency and profitability profile, supporting the company’s ability to generate returns above its cost of capital. The dividend yield remains modest at 0.44%, reflecting a conservative payout policy consistent with reinvestment in growth and R&D activities.

Enterprise value to capital employed (EV/CE) is 3.36, and EV to sales is 2.82, both suggesting reasonable valuation multiples relative to the company’s asset base and revenue generation. The PEG ratio is reported as zero, which may indicate either a lack of consensus on earnings growth estimates or a data anomaly; investors should consider this in conjunction with other metrics.

Market Price and Trading Range

As of 16 February 2026, Marksans Pharma’s stock price closed at ₹182.00, down 3.14% from the previous close of ₹187.90. The stock’s 52-week high was ₹270.60, while the 52-week low was ₹157.25, indicating a wide trading range and significant price correction from recent highs. Intraday volatility was contained between ₹180.85 and ₹186.05, reflecting cautious investor sentiment amid valuation recalibration.

Sector and Industry Outlook

The Pharmaceuticals & Biotechnology sector continues to face a complex environment characterised by regulatory scrutiny, pricing pressures, and evolving global supply chain dynamics. While large-cap peers maintain premium valuations due to robust pipelines and global footprints, mid-cap companies like Marksans Pharma are increasingly viewed through the lens of valuation discipline and growth sustainability.

Investors are advised to monitor the company’s earnings trajectory, margin trends, and strategic initiatives closely, as these will be critical in justifying any upward re-rating from the current fair valuation status.

Investment Implications and Outlook

The transition of Marksans Pharma’s valuation from expensive to fair suggests a more balanced risk-reward profile for investors. While the downgrade to a Sell grade by MarketsMOJO reflects caution, the company’s relative valuation advantage compared to expensive peers may attract value-oriented investors seeking exposure to the pharmaceutical sector without paying a premium.

However, the recent price correction and subdued one-year returns highlight the need for careful analysis of earnings momentum and sector developments. Investors should weigh the company’s solid ROCE and ROE against the broader market and peer valuations, considering the potential for recovery or further downside depending on operational execution and market conditions.

In summary, Marksans Pharma Ltd currently offers a fair valuation entry point amid a challenging sector landscape, but investors should remain vigilant and consider alternative opportunities within the sector and beyond to optimise portfolio performance.

Unlock special upgrade rates for a limited period. Start Saving Now →