India Ratings and Research (Ind-Ra) has upgraded Marksans Pharma (Marksans) Long-Term Issuer Rating to 'IND A' from 'IND A-'.  The Outlook is Positive.

The agency continues to take a consolidated view of Marksans and its subsidiaries (together referred to as Marksans) - Bell, Sons and Co. (Druggists) (100% shareholding; based in the UK) and Relonchem  (100%; based in the UK) and Time-Cap Labs, Inc (100%; based in the US) and Nova Pharmaceuticals Australasia Pty (60%; based in Australia), while arriving at the ratings because of the strong strategic, operational and legal linkages among them.

The rating upgrade reflects the continued improvement in the business and financial profile of Marksans in FY21, driven by the following factors: i) front-end pharmacy integration in the UK through Bell Sons and Co, and in the US through Time-Cap Laboratories; ii) higher proportion of sales through the OTC mix; iii) diversified geographic presence in the large regulated markets of the US and the UK; iv) high EBITDA to operating cash flow conversion; v) low leveraged balance sheet, moderate capex outflow in the near term in relation to cash flows; and vi) a healthy sustainable improvement in the EBITDA margins.

The Positive Outlook reflects Marksans's intention to expand further in the European markets and its planned backward-integration into the active pharmaceuticals ingredients (API) business, which would aid further revenue diversification and help Marksans achieve greater scale and operating leverage.  This coupled with primary infusions from the promoter (Mark Saldanha) and OrbiMed Asia IV Mauritius FVCI (Orbimed) over FY22-FY23 would aid in keeping the financial profile robust.