Mankind Pharma, India’s fourth-largest drugmaker by domestic sales, saw a rough patch due to lacklustre domestic revenue, margin pressure and finance costs associated with the acquisition of Bharat Serums and Vaccines (BSV) and related integration challenges, all of which have weighed down its guidance. However, the company is committed to its 25-26% EBITDA margin guidance and expects export growth to remain robust.
The Delhi-based pharma company’s shares have fallen over 11 percent in last six months, underperforming the broader BSE Healthcare Index, which has gained 5.6 percent during the same period.
Mankind’s Q2FY26 performance saw a 21 percent on year fall in net profit, weighed down by rising financing costs and depreciation linked to the acquisition of Bharat Serums and Vaccines (BSV).
The domestic pharma business, which accounts for the bulk of Mankind’s revenue, rose at a slower pace at 6.6 percent on year in Q2FY26, trailing the 7.2 percent growth seen in the Indian Pharmaceutical Market (IPM).
Mankind Pharma CEO Sheetal Arora has attributed the slowdown to GST 2.0 disruptions and uneven monsoon, adding that organic domestic growth was around 6% YoY and 6.6% excluding OTC for this quarter.
Vice Chairman Rajeev Juneja candidly admitted the underperformance during the earnings call. “We are not happy with our own performance… We may be over-expected that we could replace and train new people quickly. It did not happen in 9–12 months’ time.”
What Went Wrong
Mankind’s organic growth in domestic branded formulation business slowed to 6.6 percent YoY in Q2FY26, attributed to GST 2.0 and its impact on the acute-heavy portfolio along with the expenditure to deepen rural reach.
The consumer health or the over-the-counter segment revenue fell 3 percent YoY, impacted by supply chain issues and erratic monsoon. While secondary sales of Manforce and Gas-O-Fast rose 14 percent and 36 percent, primary sales didn’t keep pace. CEO Sheetal Arora said, “Our modern trade and e-commerce share has expanded to 12 percent in H1FY26 versus 8 percent last year,” indicating a shift in channel strategy.
Synergies from the BSV acquisition have been slow to materialize, though the management still expects 18–20% growth going forward, but the recovery has now been pushed to late FY26.
The EBITDA margins dropped to 24.9 percent from 27.6 percent last year due to higher R&D spend (2.9 percent of sales), rising employee costs and integration expenses. The finance costs - due to debt taken to acquire BSV - more than doubled to Rs 170 crore, while depreciation surged on account of BSV’s asset amortization, weighing heavily on net profit.
Recovery in Second Half?
Looking ahead, management is hopeful of a recovery in the second half of FY26. “We expect to outperform IPM by 1.1x–1.2x in the second half,” said Juneja, while emphasizing a conservative view. “This is not the habit of Mankind. We’ve always outperformed IPM by 1.3-1.4x. That’s our DNA.”
The consumer pharma company expects GST disruptions to ease in the second half, and sees BSV - acquired for Rs 13,600 crore - to deliver stronger sequential growth, especially in women’s health and biologics.
The company has maintained a 18-20 percent growth guidance for BSV.
Mankind also expects export growth to remain robust. CEO Sheetal Arora and CFO Ashutosh Dhawan reiterated that the company is committed to 25-26% EBITDA margin guidance, though it will likely be at the lower end for FY26.
“BSV delivered double-digit growth QoQ and high single-digit YoY,” said Prakash Agarwal, President Strategy, adding that “margin improvement will be driven more by revenue synergies than cost cuts,” with EBITDA margins expected to reach 26-28 percent in H2.
JPMorgan has revised its price target to Rs 2,950, down from Rs 3,150, citing muted near-term outlook. Analyst Bansi Desai said, “We cut FY26/27/28E EBITDA by 5%/3%/4% to account for Q2 miss and lower revenue assumptions for India.” The stock now trades at 22.5x FY27 EV/EBITDA, a 10–15% discount to Torrent Pharma.
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