Mankind Pharma staged a stellar performance on its listing day despite volatility in the overall equity markets. The stock opened with more than 20 percent gains at Rs 1,300 on the NSE, which was way above analysts' expectations as well as the grey market premium.
Gradually, it gained more strength and hit an intraday all-time high of Rs 1,430. Overall, it stayed above Rs 1,350 levels for the major part of the session, and finally settled near its record high at Rs 1,422.3, rising 31.69 percent over the issue price of Rs 1,080.
On the BSE too, the stock closed with 31.86 percent gains at Rs 1,424.05.
In terms of volume, Mankind traded with 3.31 crore shares on the NSE, and more than 12 lakh shares on the BSE.
"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 received good response from its anchor clients given its domestic-focused business with strong brand recall in both chronic and consumer healthcare segments," Hemang Jani, Head of Equity Strategy at Motilal Oswal Financial Services said.
The fourth largest pharmaceutical firm in terms of domestic sales has raised Rs 4,326 crore via its maiden public issue that comprised only an offer for sale and there was no fresh issue portion.
Also read: Mankind Pharma IPO - After a giant leap by Mankind Pharma, should you too take a leap of faith?
The price band for the offer was Rs 1,026-1080 per share. The public issue received a robust response from qualified institutional investors including the anchor book.
Given its healthy financial track record, domestic focus and extensive network, Mankind is likely to continue doing well, Jani believes.
Macquarie Research has initiated coverage on the stock with an outperform rating and a target price of Rs 1,400. The stock already crossed the said target on listing day itself.
Mankind Pharma derives 98 percent of its revenue from the domestic pharma market. Within its domestic business, 90 percent of revenue comes from prescription pharmaceuticals and the rest from the consumer health business. It has one of the largest networks of medical representatives in India and more than 80 percent of doctors prescribe its products.
Macquarie believes growth potential in the chronic segment would likely drive meaningful margin expansion from 22 percent in FY23 to 28 percent by FY26, leading PAT to more than double (from Rs 1,300 crore in FY23 to Rs 2,800 crore in FY26).
Click Here To Read All IPO Related News
"Mankind has a net cash of Rs 280 crore as of December 2022 with strong cash flow generation. FY22 ROIC of 30 percent and ROE of 26 percent fare much better than its domestic peers (average ROIC ~17 percent, average ROE ~16 percent) and are in line with MNC peers such as Abbott, Pfizer, and GSK India," the global brokerage said.
However, capacity utilisation remains low, suggesting room for improvement, it feels.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
