Why Mankind Pharma needs more boosters
Investors who were allotted Mankind Pharma Ltd shares during the initial public offering are a happy lot. After the stellar listing gain of about 32% on 9 May, the stock has continued its upward trajectory, soaring another 48% to date. Mankind derives more than 90% of its revenue from the domestic markets with popular brands such as Manforce (condoms), PregaNews (pregnancy test kit) and Gas-O-Fast (antacid powder) in its portfolio.
However, these brands are a part of the consumer healthcare segment, which is too small to move the needle for the company's overall revenue. This segment’s revenue formed only about 7% of Mankind’s consolidated revenue in the nine-month ended December (9MFY24). Hence, the key driving force behind investors’ enthusiasm is the domestic branded prescription business, catering to therapies such as anti-infectives, gastrointestinal and cardiovascular.
In fact, the company outperformed the Indian pharmaceutical market (IPM) by clocking secondary sales growth of 8.6% versus IPM’s 8.2% in 9MFY24. Mankind is focusing on increasing the share of revenue from the chronic segment as it enjoys higher price realization thus boosting margins. The chronic segment’s margin is higher by 10-12 percentage points versus the acute segment.
In 9MFY24, the share of chronic segment in the domestic branded prescription business stood at 35% against 34% in the same period last year. Mankind expects an Ebitda margin of 24-26% in FY24, up from nearly 22% in FY23. Increasing contributions from the chronic segment, improved productivity and brand creation are expected to lead to margin expansion ahead.
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