Mankind Pharma IPO: 5 Things to Know

Investors were waiting for the Mankind Pharma IPO for so long that I cannot help but say... 'Dekho wo aa gaya' (English translation - It's finally here).

Yes, the wait is finally over as one of the biggest pharma company's IPO is finally here.

In September 2022, the pharma company filed its papers with the market regulator and ever since then, it was one of the most anticipated IPOs to watch out in 2023.

2023 has not been an easy year for the Indian share markets. Troubles started when Adani - Hindenburg story played out in January 2023 which was followed by the global banking crisis in the US and now the dull prospects of IT companies.

Resultantly, many companies were hesitant about coming out with their offers. With the Mankind Pharma's IPO, this could all change.

Remember, the Tata Technologies IPO is also slated to open in the next couple of months.

With that context out of the way, let's take a look at the key details of Mankind Pharma IPO.

Issue period: 25 April 2023 to 27 April 2023

Issue size: Issue of 40.1 million (m) shares

Type: Offer for sale

Face value: Re 1 per equity share

Price band: Rs 1,026 to Rs 1,080 per equity share

Bid lot: 13 shares and in multiples thereof

Application limit: Minimum one lot maximum fourteen lot for retail investors

Grey market premium (GMP): Rs 90-95 (as of 25 April 2023)

The company has reserved not more than 50% shares of the offer for qualified institutional buyers (QIB). It has reserved not less than 15% for non-institutional buyers (HNI). Hence not less than 35% of shares are available for retail individual investors.

Tentative IPO allotment date: 3 May 2023

Tentative listing date: 8 May 2023

Here are five key details of the IPO.

#1 About the company

Mankind Pharma is an Indian multinational pharma company, based in Delhi. The company has products in therapeutic areas ranging from antibiotics to gastrointestinal, cardiovascular, dermal, and erectile dysfunction medications.

It has one of the largest distribution networks of medical representatives in the Indian pharmaceutical market. Over 80% of doctors in India prescribed their formulations and has been ranked number 4th in terms of domestic sales during the financial year 2022.

#2 Financial position

During the pandemic, the pharma company's revenue was hit which should come as a surprise because pharma stocks boomed and were the biggest gainers of the Covid-19 rally. However, on a compounded annual growth rate (CAGR) basis, its sales have gone up by 12.2% in the past five years.

Despite incurring high expenses, the company has been able to maintain high profit margins. In financial year 2022, the company's net profit margins suffered despite a 25% rise is total revenue.

Financial snapshot (2020-2022)

Particulars	31-Mar-22	31-Mar-21	31-Mar-20
Revenues (Rs m)	79,775.50	63,833.50	59,756.50
Revenue Growth (%)	25.00%	6.80%
Expenditure Before Tax	60,174.30	47,054.50	45,494.50
% of Total Income	75.4	73.7	76.1
Net Profit	14,529.60	12,230.30	10,561.50
Net Profit Margin (%)	18.2	19.2	17.7
Net Worth	63,163.10	49,628.90	36,715.50
Return on Net Worth (%)	23.3	26.8	29.6
Basic Earnings per share (Rs)	33.8	31.6	25.72

Data Source: Company's DRHP

#3 Peer comparison

As per the company's red herring prospectus (RHP), Sun Pharma, Cipla, Zydus Lifesciences, Torrent Pharma, Alkem Laboratories, JB Chemicals and Pharmaceuticals, Eris Lifesciences, Ipca Laboratorires, Abbott India, Dabur India, Procter and Gamble Health, and Zydus Wellness are its listed peers.

Peer Comparison

Company	Total Income (2022) (Rs m)	Net Profit	EPS (Basic) (Rs)	Return on Net Worth (%)
Mankind Pharma	77,815.6	14,529.6	35.9	23.3
Sun Pharma	386,544.9	34,058.0	13.6	6.8
Cipla	217,633.4	25,595.0	31.2	12.1
Zydus Lifesciences	152,652.0	23,264.0	43.8	26.4
Torrent Pharma	85,080.4	7,772.0	23	13.1
Alkem Laboratories	106,341.9	16,803.0	137.6	19.1
JB Chemicals and Pharmaceuticals	24,242.4	3,860.0	49.9	18.1
Eris Lifesciences	13,470.4	4,058.0	29.9	21.3
Ipca Laboratorires	58,297.9	9,110.0	34.9	16.1
Abbott India	49,192.7	10,256.0	375.9	28.3
Glaxosmithkline Pharmaceuticals	32,780.3	3,808.0	100	63.6
Dabur India	108,886.8	17,423.0	9.8	20.8
Procter and Gamble Health	111,44.1	1,925.0	116	31.2
Zydus Wellness	20,091.0	3,089.0	48.5	6.4

Data Source: Company's Red Herring Prospectus (RHP)

#4 Arguments in favour of the business

• The company is in a very niche segment with strong visibility in the API, formulations, and the consumer health segment. The robust profit margins for the company comes from its near dominance of the niche segments in the domestic market place.
• It is a well-established and growing consumer healthcare franchise. It has strong brand reputation. The company's reputed brands like Manforce and Prega News are extremely popular in India and that is likely to act as a moat.
• It has a diversified portfolio of products across leading therapeutic areas. In terms of domestic sales (in financial year 2022), it is among the 10 largest companies in 10 of the leading therapeutic areas.
• The product linked incentive (PLI) scheme to promote domestic manufacturing of critical key starting materials, drug intermediates, and APIs will boost the company's growth.

#5 Risk factors

• The biggest problem hurdle for investors in pharma companies is stringent regulations. All pharma companies subject to extensive government regulations which are also subject to change. If Mankind Pharma fails to comply with the applicable regulations prescribed by the governments and the relevant regulatory agencies, its business, financial condition, cash flows and results of operations will be adversely affected.
• 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.
• Any failure to maintain and enhance, or any damage to, its brands, product image or reputation could adversely affect the market recognition of, and trust in, the company's products.
• The availability of counterfeit drugs, such as drugs passed off by others as Mankind's products, could bear a negative impact on the goodwill and results of operations.

In conclusion

So far, 2023 has turned out to be a tough year. Adani group stocks were soaring high before they hit the roadblock because of a report issued by Hindenburg research. Banking stocks also suffered a similar fate.

In 2022, the Nifty Bank index hit life-time highs multiple times, but due to the global banking crisis Indian banking stocks also suffered. It would be safe to say 2023 so far is a year of unexpected events for stock markets.

Coming to Mankind Pharma's IPO, 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.

However, the pharma sector is a rapidly evolving sector, with new inventive drugs and healthcare products coming out every now and then.

The company is also subject to stringent regulation which has strong bearing on the overall performance of the company.

Investors should prepare their list of pros and cons before making any investment decision.

Stay tuned to get further updates on this IPO and all upcoming IPOs in the market.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...