Mankind Pharma shares: Antique cuts price target to Rs 1,539 post maiden quarterly results

Antique Stock Broking has cut its target price for Mankind Pharma to Rs 1,539 from Rs 1,584 earlier while maintaining its 'Buy' rating on the stock, valuing the company at 30 times FY25 earnings per share (EPS).

The brokerage noted that gross margin for Mankind Pharma came for in at 67.2 per cent for Q4, declining sequentially by 40 basis points largely on account of lower sales. Ebitda margin, it said, also declined 60 bps sequentially to 20.6 per cent. It, however, added that Mankind has guided for significant improvement in Ebitda margin to 24-26 per cent range.

"The improvement will be largely driven by lower input costs, price hikes in Rx portfolio, improved mix of contribution from chronic therapies, and faster growth from Panacea's portfolio. With the IPM likely to grow at 10-11 per cent, we expect Mankind to grow at 13 per cent CAGR over a two-year period. As per our estimates, higher than IPM growth in India business is likely to improve EBITDA margin to 25 per cent by FY25, it said.

Revenue growth at 19 per cent on YoY basis was robust, Antique said noting that Mankind's India business grew at 18 per cent YoY.

"Mankind's branded prescription business grew 18 per cent YoY, largely driven by core therapies of Anti-Infective, Respiratory, and GI, whereas its Consumer Healthcare business grew 10 per cent YoY, on account of higher rural penetration for its key brands viz. Manforce and Prega News. During the quarter, contribution from chronic therapies improved to 35 per cent against 33 per cent in FY22," the brokerage noted.

On Thursday, the newly-listed stock was trading 1.05 per cent higher at Rs 1,372.50 on BSE. The stock, which got listed on My 9, is up 27 per cent from its IPO issue price of Rs 1,080. Antique's target suggests a 12 per cent upside for the stock from this level.

Mankind Pharma reported a PAT of Rs 294 crore for the March quarter, up 52 per cent. Revenue from operations grew 19 per cent YoY to Rs 2,053 crore, up 19 per cent. Ebitda margin for the quarter came in at 20.4 per cent against 16.8 per cent YoY.

Compared to its peers, Mankind has lower presence in metros and Tier 1 towns with revenue contribution of 53 per cent against IPM contribution of 63 per cent. That said, Mankind's growth in metro and Tier 1 cities stood at 11 per cent against 9 per cent for IPM in FY23.

"We like Mankind's India franchise given its healthy regional mix, improving acute-chronic ratio and growing Consumer Healthcare business. As Mankind's pricing is lower than its peers in a large part of its portfolio, we believe the company is likely to take steady price hikes. We also expect Mankind to grow its Anti-Diabetic and cardiac franchise via new launches (large brands going off patent in India) and focused brand/ sub-therapy marketing approach," Antique said.

With pricing tailwind and improved contribution from Chronic portfolio, Antique said it believe gross margin can improve further.

"On the whole, we expect Mankind to deliver 25 per cent Ebitda margin and 13 per cent EPS CAGR by FY25," it said.

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