- Date : 09/05/2023
- Read: 3 mins
Mankind Pharma overcomes lukewarm retail subscriptions with strong expert ratings and institutional subscriptions to mark a stellar listing. Buy, hold or sell?
- Mankind Pharma is an Indian pharma major with strong financials
- It got a lukewarm retail response but was buoyed by strong ratings and institutional interest
- As it gets listed at over 20% premium, the decision of buying, selling or holding it must be examined closely
Domestic pharmaceutical major Mankind Pharma’s Initial Public Offering (IPO) closed for subscription recently. Its shares of a face value of Re 1 were offered at the price band of Rs 1,026 to Rs 1,080. As the stock gets listed on 9 May 2023, it opened at a premium price of Rs 1,300 per share and crossed Rs 1,400 in the first two hours.
Mankind Pharma IPO is the biggest pharma listing since Gland Pharma’s debut in 2020 and certainly the biggest IPO of the year so far. Notably, the stock was being traded at a premium of nearly 10% in the grey market. The IPO was subscribed 15.32 times, including 49 times by qualified institutional investors and 3.8 times by non-institutional buyers.
First thoughts from experts
In view of the overwhelming response in the stock market, many experts have commented on the stock and indicated what might be the best course of action for existing and potential investors of Mankind Pharma.
Macquarie expects the company to double its profit after tax by the end of the financial year 2025-26. The firm sees strong growth prospects in the chronic medication segment and pointed out that Mankind dominates heavily in medical prescriptions and through its representative network.
GCL Broking’s Ravi Singhal said that a near-term target price of Rs 1,440 can be set by investors, with a stop-loss at Rs 1,200. Swastika Investmart’s Santosh Meena said that selling or holding the stock is at the investor’s discretion, but highlighted a stop-loss of Rs 1,080. Meena also mentioned that Mankind has very strong fundamentals, and the positive rating by global giants like Macquarie will make it even more attractive.
It must be noted that market sentiments have been mixed at best in the last few weeks. This was reflected in the lukewarm response of the retail investors towards Mankind Pharma IPO. It got subscribed only 92% in the retail segment.
Mankind Pharma’s performance so far
Mankind Pharma is the second-largest domestic company in the Indian pharma industry in terms of volume. In FY22, it gave a Return on Equity (ROE) of 26%. This is comparable to its multinational peers like Abbott India - 29%, GSK India - 29% and Pfizer India - 23%. Among domestic competitors, only Eris LS, Torrent Pharma and Alkem have an ROE of 23%, 21% and 20%, respectively.
The company draws nearly 90% of its revenue from prescription products, while the remaining 10% comes from other healthcare products. Mankind Pharma features in the prescriptions of over 80% of doctors in India. 98% of its revenue originates in India.
Mankind Pharma’s impressive early hours in the stock market are backed by the company’s robust business and encouraging remarks by experts. With its strong financial core, the company is expected to perform well in the years ahead. Existing investors must try to spot its peak and maintain a stop-loss at all times. With the stock racing towards a crescendo, prospective investors should avoid the rush and instead look for an entry path in the days to come.