01 — At a Glance
The Pharmacy Nobody’s Heard Of, That Made Their Pain Reliever
- 52-Week High / Low₹70.5 / ₹33.5
- Q3 FY26 Revenue₹462 Cr
- Q3 FY26 PAT₹27.5 Cr
- TTM EPS₹1.82
- Annualised EPS (Q3 Avg × 4)₹2.0
- Book Value / Share₹21.8
- Price to Book1.69x
- FY25 PAT₹118 Cr
- FY26 YTD (9M)₹66 Cr
- ROCE15.1%
Flash Summary: Morepen just posted Q3 revenue of ₹462 crore (up 13% YoY), but here’s the spicy part—PAT came in at ₹27.5 crore, up 3% YoY. It’s the kind of earnings growth that screams “we’re investing in the future” or whispers “we’re getting squeezed by competition.” Meanwhile, they just signed a ₹825 crore CDMO (contract development and manufacturing) contract to be the world’s pharmacy. The stock has crashed 24% in 6 months. But PE ratios don’t tell the whole story. Sometimes they’re just keeping score wrong.
02 — Introduction
The Company That Cures Your Allergies But Can’t Cure Its Perception
Morepen Laboratories is a 40-year-old pharmaceutical company headquartered in Gurgaon with manufacturing plants in Baddi, Himachal Pradesh. They make Active Pharmaceutical Ingredients (APIs), finished formulations, and medical devices. Think of them as the invisible hand that manufactures the drug that cures your hay fever. They probably did. Their portfolio includes 70% of India’s Montelukast market (the anti-asthma king), 69% of Loratadine (the allergy buster), and they’re not shy about it.
Financially, they’re at a crossroads. FY25 saw PAT of ₹118 crore with a 3% dividend after 23 years of financial celibacy. Nine months into FY26, they’ve already posted ₹66 crore PAT. But the stock is down 24% in 6 months, P/E is at 26.5x (above sector median of 27.5x), and investors are asking: “Why are you so expensive if you’re growing so slowly?” Fair question. Unfair answer: because three days ago, they bagged ₹825 crore in CDMO contracts from international players. Supplies start in 4-5 months. And literally nobody in the retail market knows this yet.
The Q3 FY26 story has two chapters. First: organic business challenges. API pricing is under pressure from Chinese competition. Margins are being squeezed. Growth is pedestrian at 3-13%. Second: a mega-contract win that could change the earnings trajectory. A ₹825 crore international CDMO order over 12-15 months could add 30-40% to quarterly revenue once it hits stride. The market hasn’t priced this in because investors were too busy selling.
Infomerics Rating (Aug 2025): IVR A- / Stable. The rating agency acknowledges established market position, comfortable debt profile (gearing 0.09x), and DSCR of 16.33x. But they also warn about “margin pressure in API segment” and “dependency on legacy APIs.” In other words: they’re a solid business, but old drugs aren’t sexy, and Chinese competitors are stealing their price power.
03 — Business Model: WTF Do They Even Do?
They Make The Molecules That Stop You From Sneezing at 3 AM
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