Mankind Pharma Ltd – IPO Note

Firm Overview:

Mankind Pharma Ltd is a 33-year-old pharmaceutical firm integrated within the yr 1991. The corporate develops and manufactures an entire of vary of pharmaceutical formulations to deal with acute and persistent therapeutic areas. As well as, it is usually extraordinarily in style in India for its client healthcare merchandise, particularly these bought below the Manforce model and the Prega Information model. Its formulations model embody anti-infectives, cardiovascular, gastrointestinal, anti-diabetic and respiratory points; amongst others. Mankind Pharma has over 600 scientists manning its R&D centre, and has already utilized 55 ANDAs. The corporate additionally has one of many largest distribution networks of medical representatives within the Indian pharmaceutical market.

Objects of the Supply:

To hold out the Supply for Sale of 4,00,58,844 Fairness Shares by the Promoting Shareholders.
Obtain the advantages of itemizing the Fairness Shares on the Inventory Exchanges.

Funding Rationale:

Distinctive Place: Mankind pharma is the India’s fourth largest pharmaceutical firm by way of Home Gross sales and third largest by way of gross sales quantity for MAT (Month-to-month Annual Complete) December 2022. The corporate is predominantly an India pushed enterprise with 97% of its revenues coming from the home market. They function on the intersection of the Indian pharmaceutical formulations and client healthcare sectors with the goal of offering high quality merchandise at reasonably priced costs, and have a longtime observe document of constructing and scaling manufacturers in-house. They’ve created 36 manufacturers within the pharmaceutical enterprise which have achieved over Rs.50 crs every in Home Gross sales for MAT December 2022. Their Formulations manufacturing services have a complete put in capability of 42.05 billion items each year throughout a variety of dosage types together with tablets, capsules, syrups, vials, ampoules, blow fill seal, mushy and onerous gels, eye drops, lotions, contraceptives, and different over-the-counter merchandise, as of December 31, 2022. The corporate have outperformed the IPM (Indian pharmaceutical market) in 5 out of 10 key therapeutic areas.

Client Healthcare manufacturers: The corporate have established a number of client healthcare manufacturers within the condoms, being pregnant detection, emergency contraceptives, antacid powders, vitamin and mineral dietary supplements and anti-acne preparations classes, amongst others. The corporate holds the class management positions in (i) the male condom class, the place its Manforce model had Home Gross sales of roughly Rs.451 crs (representing a market share of roughly 30.2%), (ii) the being pregnant detection equipment class, the place its Prega Information model had Home Gross sales of roughly Rs.153 crs (representing a market share of roughly 80.1%), and (iii) the emergency contraceptives class, the place its Undesirable-72 model had Home Gross sales of roughly Rs.90 crs (representing a market share of roughly 59.2%), for FY22.

Monetary Observe Document: The consolidated income from operations have elevated at a CAGR of 15% between FY20-FY22 from Rs.5865 crs in FY20 to Rs.7782 crs in FY22. The EBITDA for the corporate has elevated at a CAGR of 18% from Rs.1438 crs in FY20 to Rs.1991 crs in FY22. The EBITDA margin has been standing between 25-27% for the previous 3 years. The Revenue after Tax of the corporate has elevated at a CAGR of 17% between FY20-FY22 from Rs.1056 crs in FY20 to Rs.1453 crs in FY22. The PAT margin of the corporate was 18%, 21% and 19% in FY20, FY21 and FY22. The corporate’s constant development has been backed by its capital effectivity which led to robust ROCE of 36%, 30% and 26% for FY20, FY21 and FY22.

Key Dangers:

OFS – The IPO is an entire Supply for Sale (OFS) by the Promoting Shareholders. The Promoting Shareholders will obtain your entire proceeds from the OFS and the Firm won’t obtain any a part of the proceeds of the Supply. Promoter & Promoter group promoting shareholders will offload 1,00,14,711 shares and different promoting shareholders will offload 3,00,44,133 shares.

Authorized Proceedings – The corporate’s Promoters, Subsidiaries, and Administrators are at present concerned in sure authorized proceedings. These authorized proceedings are pending at totally different ranges of adjudication earlier than numerous courts.

Outlook:

Mankind pharma, one of many largest home pharma gamers, going public by promoting round 10% of its total stake. The corporate’s monetary efficiency could be very robust besides a small setback attributable to a one-off transaction in 9MFY23. The corporate’s listed friends in line with the RHP are Solar Pharma, Cipla, Zydus Life sciences, Torrent Pharma, Alkem labs, JB chemical compounds, and so on. Nonetheless, not all of the above firms can be an Apple-to-Apple comparability. At increased value band, the itemizing market cap can be round ~Rs.43264 crs and Mankind Pharma is demanding a P/E a number of of 30x primarily based on FY22EPS. Whereas evaluating with the business common P/E of 40x, the corporate appears to be absolutely priced. Based mostly on the above views, we offer a ‘Impartial’ score for this IPO.