Shares of pharma firm Mankind Pharma made a stellar debut on the bourses today. On BSE and NSE, the stock listed at ₹1,300, a premium of 20.37 percent versus its issue price of ₹1,080.
The stock jumped 31 percent to its intra-day high of ₹1413.95 on BSE.
The Mankind Pharma IPO is the largest IPO far in 2023 and is one of the largest ever public offer by a domestic drug maker since Gland Pharma's ₹6,480 crore public issue.
OUTLOOK
“Mankind Pharma got listed at a 20 percent premium to the IPO price, thus receiving a strong response. The primary market saw an IPO hitting after a long gap, thus the interest was high. Moreover, the healthcare sector was a laggard over the last one year but started seeing traction over the last two months as the monthly pharma data showed improvement. Thus, Mankind Pharma has received a good response from its anchor clients given its domestic-focused business with strong brand recall in both the chronic and consumer healthcare segments. Given its healthy financial track record, domestic focus and extensive network, Mankind is likely to continue doing well,” said Hemang Jani, Head of Equity Strategy, Motilal Oswal Financial Services.
Meanwhile, S Ranganathan, Head of Research at LKP Securities also noted that Mankind Pharma truly deserves credit for bringing back life into the Primary Market during CY 2023 with a stellar listing and the icing on the cake was the allotment itself wherein almost all retail investors were allotted the shares.
Meanwhile, Macquarie also has an outperform call on the stock with a target of ₹1,400.
“Mankind Pharma, the second-largest domestic pharma company in terms of volume, appears to be well positioned to double its PAT by FY26e. We believe continued sales outperformance to the India market, focus on chronic therapies and improved salesforce productivity are growth drivers,” it rationaled.
ABOUT THE IPO
The ₹4,326 crore IPO of Mankind Pharma, which was completely an offer for sale (OFS), was opened for subscription between April 25-27 with a price band of ₹1,026-1,080 per share.
The issue also received an overwhelming response and was subscribed a whopping 15.32 times driven by strong interest from qualified institutional investors. The QIB portion of the IPO was subscribed 49 times, and that for high net-worth individuals (HNIs) was subscribed 3.8 times. However, retail investors didn't show much interest in the IPO.
Ahead of its IPO, Mankind Pharma has allocated 1.2 crore equity shares to 77 anchor investors, which included some marquee foreign and domestic institutions. The anchor allocation was done at ₹1,080 per share.
The public offering, which was a pure offer-for-sale (OFS) of 40,058,844 equity shares by the promoters and other existing shareholders, has a face value of Re 1 per equity share.
The offer was made through the book-building process, in which not less than 15 percent of the offer must be made available to non-institutional investors and not less than 35 percent of the offer must be made available to retail individual investors. Not more than 50 percent of the offer was to be allocated to qualified institutional buyers.
The objectives of the offer were to (i) carry out the offer for sale by the selling shareholders and (ii) achieve the benefits of listing the equity shares on the stock exchanges.
All of the offer proceeds were to be received by the selling shareholders in proportion to the offered shares that each selling shareholder sold as part of the offer; the company will not receive any of the offer proceeds.
Mankind Pharma Ltd. (MPL), incorporated in 1991, is a well-known and fastest-growing player in the Indian pharma market and the 4th largest in terms of domestic sales and 3rd largest in terms of domestic sales volume as on Dec’22 MAT (Moving Annual Total).
With 97 percent of its revenue from India, MPL sells pharmaceutical formulations and consumer healthcare goods and operates 25 manufacturing sites and a specialised R&D center with four divisions.
Most brokerages had advised 'subscribing' to the issue on the back of market leadership, brand recognition, good financial performance and a strong distribution network, among others.
"At the upper price band of ₹1,080, MPL is available at a P/E of 30x (FY22), which appears reasonably priced compared to peers. Considering the under-penetration of healthcare services and lower consumer expenditure in healthcare in India, MPL’s focus on chronic therapeutic areas, emphasis on increasing penetration in metro and Class I cities, growth in the consumer healthcare business, good financial performance and strong distribution network, it has assigned a “Subscribe” rating on a long term basis," said Geojit Financial Services in its review report.
