Mankind Pharma IPO

Company and IPO Overview:

Mankind Pharma is India’s fourth largest pharmaceutical company in terms of Domestic Sales and second largest in terms of sales volume for the Financial Year 2022. It is engaged in developing, manufacturing and marketing a diverse range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products. It is focused on the domestic market, as a result of which its revenue from operations in India contributed to 97.60% of its total revenue from operations for the Financial Year 2022.

In terms of domestic sales for the Financial Year 2022, it is the youngest firm among India's five major pharmaceutical corporations and has mostly grown organically. With the goal of offering high-quality products at reasonable prices, it operates at the nexus of the Indian pharmaceutical formulations and consumer healthcare sectors. It has a proven track record of creating and growing brands internally. It developed 36 brands for the pharmaceutical industry, each of which generated domestic sales of more than Rs 500.00 million in the FY 22.

Mankind Pharma is present in several acute and chronic therapeutic areas in India, including anti-ineffective, cardiovascular, gastrointestinal, anti-diabetic, neuro/CNS, vitamins/minerals/nutrients and respiratory. The company has made efforts to establish “Mankind” as a well-recognized brand in India. It has a demonstrated track record of creating brands with Domestic Sales of over Rs 1.00 billion.

It has over 36 brands, including Manforce (Rx), Moxikind-CV, Amlokind-AT, Unwanted-Kit, Candiforce, Gudcef, Glimestar-M, Prega News, Dydroboon, Codistar, Nurokind-Gold, Nurokind Plus-RF, Nurokind-LC, Asthakind-DX, Cefakind, Monticope, Telmikind-H, Telmikind, Gudcef-CV, and Unwanted-72, amongst others.

Mankind Pharma IPO is a mainboard IPO and it is going to raise around ₹4326 crores via IPO that comprises only offer for sale (OFS) up to ₹ 4326 crores.The retail quota is 35%, QIB is 50%, and HNI is 15%. The price band of the issue is ₹1026 to ₹1080.This will be the biggest IPO since Gland Pharma (November 2022), floated IPO worth ₹6,480 crores.

Financials (rounded off):

Date	Total Revenue (₹ in cr)	​​​PAT (₹ in cr)
​31/03/2020	5976	1056
31/03/2021	6385	1293
31/03/2022	7978	1453
31/12/2022(9 months)	6778	1016

Objectives of the Issue:

The proceeds of the issue made by the company will be directly credited to the selling shareholders on a proportionate basis after deducting the necessary expenses of the issue and nothing of the issue will be received by the company.

IPO Details:

IPO Date	25/04/2023-27/04/2023
Face Value	₹1 per share
IPO Price Band	₹1026-₹1080 per share
IPO Lot Size	13 Shares
Listing at	NSE, BSE
Basis of Allotment	03/05/2023
Credit of Shares in Demat	05/05/2023
Listing Date	08/05/2023
Pre-Issue Shareholding	79%
Post-Issue Shareholding	-
Retail Minimum Lot Size	13 shares (₹14,040)

Valuations and Margins:

	FY20	FY21	FY22
EPS (Rs.)	25.72	31.59	35.78
Debt/Equity	(0.03)	0.02	0.08
ROCE (%)	35.86	30.41	25.5
EBITDA (%)	24.69	26.71	25.75
P/E Ratio	-	-	28.68-30.18

PE Analysis of the Company with its peer:

Name of the company	P/E
Sun Pharma	29.5
Cipla	27.7
Abbott India	51.3
JB Checmicals	40.36

As it can be seen, Mankind Pharma Ltd is valued somewhere between 28.68 – 30.18, and given the potential the company has and growth prospects it has projected, the IPO can be said to be fairly priced.

Important things to note about the company:

Top reasons to consider the IPO:

• Mankind Pharma is uniquely positioned to take advantage of the burgeoning growth that is to be witnessed in the healthcare and the pharmaceutical industries in the near future.

• Mankind has access to a large number of healthcare professionals in the country. Notably, according to the company, more than 80% of the doctors in India prescribed its formulations as of December 2022.

• Mankind has a robust R&D team which comprises more than 600 scientists who focus on the development of unique formulations along with product development and improvement.

• The company has established a number of brands across various healthcare segments with pregnancy detection, condoms, supplements and so on that has created a strong brand recall.

• Its consistent growth has been backed by its capital efficiency, and it had ROCE of 35.86%, 30.41% and 25.50% for the Financial Years 2020, 2021 and 2022, respectively.

Risk factors to watch out in the IPO:

• Unlike most pharma companies, Mankind Pharma is primarily focused in the domestic market, in such a scenario, any adverse happening in either the regulatory or economical scenario in the country can affect its growth and smooth functioning of operations.

• Counterfeit drugs sold under the company’s name may damage the company’s reputation

• There are outstanding legal proceedings against the promoters and the directors, some of these even includes criminal and tax proceedings.

• It's in a research and development (R&D) intensive industry. Any disruption, slowdown or shutdown in its manufacturing or R&D operations could adversely affect the business.

• Most importantly the company is undoubtedly a dominant force to reckon with in its category. A huge market share also suggests that the company is in the maturity stage and the growth phase may be over.

Crisp Insights:

• Grey Market Premium is currently ₹90 as on 25th of April, 2023.

• Pharma Sector looks very strong on charts. A lot of Pharma stocks are giving fresh breakouts or ending their consolidation while the rest of the laggards have given a clear sign that they have made their bottoms.

• This looks the best time for a pharma company to list in the stock market and ride the momentum.

• Mankind has created very strong brands with strong brand recall, something that is not commonly seen with Indian Pharma companies.

Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.