Mankind debuts with 'outperform' rating from Macquarie; stock gets a 30% uptick

Mankind Pharma

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26 Aug, 2025 12:21

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Brokerage firm Macquarie Research has given Mankind Pharma Ltd an 'outperform' rating with a target price of Rs 1,400 per share, indicating a potential upside of 29.6 percent from its issue price of Rs 1,068 per share.

Macquarie's report highlights Mankind Pharma's growth potential in the chronic segment, which could significantly expand its margins and net profit. The brokerage firm anticipates margins to rise from 22 percent to 28 percent and net profit to more than double from around Rs 1,300 crore to Rs 2,800 crore from FY23 to FY26.

Although Mankind Pharma has gained the highest market share in chronic therapies in the last five years, with a gain of about 40 basis points, its contribution to the India Pharma Market (IPM) in this area, at about 34 percent, falls short of the IPM's average of around 38 percent.

To increase its market share in this area, the company is focused on expanding through various strategies, such as field force expansion, with an addition of around 25-30 percent in the past three years. Mankind Pharma has also acquired Panacea and has engaged in in-licensing deals, such as the recent deal with Novartis. Macquarie expects these efforts to increase the company's contribution to chronic therapy, pushing it to 40 percent or more by FY26 which, in turn, will improve its margins.

The company generates almost all its revenue from the Indian pharmaceutical market, with prescription drugs accounting for about 90 percent of its domestic business, and the remaining from its consumer health division. Mankind Pharma has a vast network of medical representatives in India, and over 80 percent of doctors prescribe its products.

Mankind Pharma has achieved its position as the fourth-largest domestic pharmaceutical company by prioritising affordability, accessibility, and quality. The company has relied on in-house manufacturing and an extensive presence in Class II-IV cities to achieve lower pricing. Additionally, the company has focused on increasing medicine access in rural and Class II-IV areas. To promote affordability further, Mankind Pharma has kept its prices lower than those of its peers. Its top 50 brands are on average about 20 percent cheaper than those of its top three competitors.

As of December 2022, Mankind Pharma had a net cash of Rs 280 crore and a robust cash flow generation. The company's FY22 return on invested capital (ROIC) of 30 percent and return on equity (ROE) of 26 percent outperform its domestic peers and are comparable to MNC peers such as Abbott, Pfizer, and GSK India. However, the company's capacity utilization remains low, indicating significant room for improvement.

Macquarie values Mankind Pharma at 25x FY25 PER, based on its target price of Rs 1,400 per share, implying a 20 percent discount to MNC peers to account for innovative product launch optionality with MNC companies. At the upper band of its IPO price of Rs 1,080, the stock trades at 19x PER on the firm's FY25 EPS of Rs 56.