Mankind Pharma shares jumped more than 2 percent intraday on July 5 after it was chosen to replace HDFC in several Nifty indices, including Nifty500, Nifty Midcap150, Nifty Midcap100 and Nifty200.
The decision to include Mankind Pharma in Nifty indices came after HDFC declared merger with HDFC Bank.
At 12:25pm on Wednesday, Mankind Pharma was quoting at Rs 1,703, up 1.54 percent from the last close on the National stock Exchange. In the last one month, the stock has gained 20 percent, outperforming the Nifty Pharma index.
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Listed recently on Dalal Street, the fourth largest pharmaceutical company in the country had a stellar IPO and the company's shares were listed on the bourses at a 20 percent premium to the issue price.
Foreign brokerage firm JP Morgan initiated coverage on the shares of the pharma company with an ‘overweight’ rating, reflecting confidence in its growth potential. This confidence is attributed to the company's well-diversified portfolio and a consistent track record of surpassing market growth. The broker's note added that the company will continue to gain market share.
Kotak Institutional Equities too began coverage with a 'buy' tag on the stock with a target price of Rs 1,875 per share, an upside of 12 percent from the closing price of July 4.
The brokerage firm projected a robust compound annual growth rate (CAGR) of 37 percent in free cash flow for Mankind Pharma between FY23 and FY26, based factors such as the company's advantage of benefiting from lower raw material prices, expansion into new categories, strong profit margins, and efficient management of working capital.
Mankind Pharma derives 53 percent of its domestic revenue from urban areas. Analysts at Kotak believe that the company is well-positioned to take advantage of opportunities in the domestic market for branded prescription drugs and over-the-counter drugs. They expect Mankind Pharma to continue capitalising on the existing gaps in these segments.
Nirmal Bang also added that Mankind Pharma is one of a kind with a pure domestic play. The domestic market’s contribution is also the highest among the largecap domestic pharma peers, giving greater revenue visibility amid uncertain export growth, especially in the generic segment, the brokerage firm said.
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