It has been a while since the Indian stock market saw a public issue from a leading pharmaceutical company. Mankind Pharma, one of the country’s top pharmaceutical and healthcare companies, plans to change that scenario. The entity filed its preliminary IPO papers back in September 2022 and followed it up by filing its final Red Herring Prospectus on April 14, 2023. Interested in getting to know if the IPO has any merit to it? Continue reading to find out.
Established in 1991, Mankind Pharma is in the business of manufacturing an extensive range of pharmaceutical formulations and consumer healthcare products. In addition to manufacturing, the company also develops and markets its products under the ‘Mankind Pharma’ brand. The company’s products are used for acute and chronic pain management and for treating a wide range of illnesses and diseases.
In terms of domestic sales, Mankind Pharma is the fourth-largest player in the country. That’s not all. The company was also the second-largest in terms of sales volume in the financial year 2021-2022.
Mankind Pharma manufactures and markets male condoms under the ‘Manforce’ brand, where the company is a market leader with a 30.2% market share and total domestic sales of about Rs. 451 crores. The second-most revenue-generating product from the entity is Prega News, a pregnancy detection kit, where the market share of the company hovers around 80.1%. And finally, in the emergency contraceptive category, the company’s ‘Unwanted-72’ brand has a market share of 59.2% with a total domestic sales of about Rs. 90 crores.
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With such strong revenues and market-leading products, the company should technically have strong financials. Let’s take a look and see if that’s the case. Here are the key financial metrics for the previous three financial years as published in the draft red herring prospectus filed by the company.
(figures are in ₹ crores)
|Particulars||As of December 31, 2022||FY22||FY21||FY20|
|Equity Share Capital||40.05||40.05||40.05||40.05|
|Restated Profit / (Loss)||1,015.90||1,452.90||1,293||1,056.10|
|Diluted Earnings Per Share (EPS)||24.87||35.78||31.59||25.72|
|Return on Net Worth (RoNW)||13.94%||23.29%||26.80%||25.96%|
|Return on Capital Employed (RoCE)||16.58%||25.50%||30.41%||35.86%|
|Net Asset Value (NAV) per equity share||178.38||153.65||117.88||87|
Mankind Pharma possesses several advantages over other Indian pharmaceutical companies. Here’s a closer look at a few of its key strengths as listed in the RHP.
Although the company has many key strengths, there are also a few risks threatening its business. The RHP goes into detail regarding these risks. Let’s take a look at what they are.
Now, coming to the main part of this upcoming IPO, here are some of the key details regarding the public issue from Mankind Pharma.
The entire IPO from the pharmaceutical company is an offer for sale (OFS) from the company’s promoters and selling shareholders. Through this public issue, the investors are looking to sell approximately 4 crores (4,00,58,844) of equity shares. The company does not plan on issuing any fresh equity shares as part of this IPO.
Since the financials of Mankind Pharma are strong, the company has allocated around 35% of the issue to retail investors. Out of the remaining 65%, 50% would be reserved for Qualified Institutional Buyers and the remaining 15% would be exclusively for Non-Institutional Investors.
The issue opening date of the Mankind Pharma IPO has also been notified by the company as April 25, 2023. After remaining open for about three full days, the issue will close on April 27, 2023. The IPO price band has also been notified, which is between Rs. 1,026 to Rs. 1,080 per equity share.
With the face value of the shares being just Rs. 1, the company is seeking a hefty premium. Since the IPO price band is on the higher side, the company has chosen to keep the lot size reasonable at just 13 shares.
The total proceeds from the sale of 4,00,58,844 equity shares at the given price band should provide the promoters of the company with around Rs. 4,326.36 crores.
Seeing as the company isn’t issuing any new shares as part of this upcoming IPO, the entire proceeds from it would go to the promoters and selling shareholders. The only objectives of this public issue are -
Going by the financials of the company, the upcoming Mankind Pharma IPO looks very attractive. However, the IPO price band is slightly on the higher side. It remains to be seen if the investors also see it that way or would rather give the public issue their wholehearted support by ensuring full subscription. Analyzing the Grey Market Premium (GMP) once the issue opens for subscription should give us a clearer picture.
If you’re interested in subscribing to this public issue, it may be a good idea to open a demat account right away. This way, you can be ready to invest as soon as this upcoming IPO is opened for subscription. To open a demat account, visit the website of Motilal Oswal today and submit an online account opening form.