Antique Stock Broking has cut its target price on Mankind Pharma Ltd to Rs 1,539 a share from Rs 1,584 a share, and maintained its buy rating on the stock post its maiden March quarter earnings. The condom maker reported its March quarter earnings for the first time post listing on May 30.
The firm reported a 52-percent increase in consolidated net profit at Rs 294 crore for the March quarter, aided by robust sales. Revenue rose to Rs 2,053 crore from Rs 1,726 crore in the year-ago period, a rise of 19% primarily driven by strong performance in India operations..
The firm reported a decline in gross margin to 67.2% by 40 basis points (bps). The EBITDA margin also saw a sequential decline of 60 bps to 20.6%. However, Mankind has provided guidance for a substantial improvement, projecting the EBITDA margin to reach the range of 24% to 26% in the future.
"The improvement will be largely driven by lower input costs, price hikes in Rx portfolio, improved mix of contributions from chronic therapies, and faster growth from Panacea's portfolio. With the IPM likely to grow at 10%-11%, we expect Mankind to grow at 13% 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% by FY25," Antique Stock Broking report said.
Mankind's India business grew 18% from a year ago, accounting for 96% of the quarterly sales. Branded India formulations grew 18% YoY with the acquired portfolio of Panacea Biotec witnessing a growth of 19% YoY. Consumer healthcare business grew 10% YoY.
"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," Antique report said.
At 11.56am, the stock was trading at Rs 1,371 on BSE, up 1 percent from its previous close. The firm made its debut on exchanges on May 9, closing the day with more than 32 percent gains over the issue price of Rs 1,080 per share. Earlier this month, the Income Tax Department conducted raids on the premises of the company over allegations of tax evasion.
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