Mankind Pharma Ltd – IPO Notice

Firm Overview:

Mankind Pharma Ltd is a 33-year-old pharmaceutical firm integrated within the 12 months 1991. The corporate develops and manufactures an entire of vary of pharmaceutical formulations to deal with acute and continual therapeutic areas. As well as, it’s also extraordinarily widespread in India for its shopper healthcare merchandise, particularly these offered beneath the Manforce model and the Prega Information model. Its formulations model embrace 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 Provide:

• To hold out the Provide 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 when it comes to Home Gross sales and third largest when it comes to gross sales quantity for MAT (Month-to-month Annual Whole) 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 shopper healthcare sectors with the purpose 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 every year throughout a variety of dosage varieties 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 shopper 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 package 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 File: 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 progress 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 Provide for Sale (OFS) by the Promoting Shareholders. The Promoting Shareholders will obtain your complete proceeds from the OFS and the Firm won’t obtain any a part of the proceeds of the Provide. 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 presently concerned in sure authorized proceedings. These authorized proceedings are pending at completely 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 general stake. The corporate’s monetary efficiency could be very robust besides a small setback because of a one-off transaction in 9MFY23. The corporate’s listed friends in accordance with the RHP are Solar Pharma, Cipla, Zydus Life sciences, Torrent Pharma, Alkem labs, JB chemical compounds, and many others. Nonetheless, not all of the above firms can be an Apple-to-Apple comparability. At greater 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 based mostly on FY22EPS. Whereas evaluating with the trade common P/E of 40x, the corporate appears to be absolutely priced. Based mostly on the above views, we offer a ‘Impartial’ ranking for this IPO.

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