Mankind Pharma IPO opens today; raises ₹1,298 cr from anchor investors

Mankind Pharma, the seller of condom brand Manforce and pregnancy test kit Prega News, is set to launch its ₹4,326 crore initial public offering (IPO) today. The public offer, having a price band of ₹1,026-1,080 per share, will be available for subscriptions till April 27. Ahead of the IPO, the company has raised around ₹1,297.9 crore from 77 anchor investors. The share of the company is expected to be listed on domestic stock exchanges, BSE and NSE, on May 9.

The homegrown pharma company has raised ₹1,297.90 crore by allotting 1,20,17,652 equity shares at upper end of price band at ₹1,080 per share to 77 anchor investors (including 16 domestic mutual funds through a total of 41 schemes). The anchor investors include Canada Pension Plan Investment Board, Government of Singapore, Monetary Authority of Singapore, Goldman Sachs, Fidelity, Blackrock, Abu Dhabi Investment, Nomura, Morgan Stanley, HDFC Trustee, SBI MF, ICICI Prudential, FIAM Group Trust, National Pension Service by Blackrock, Government Pension Fund, Ashoka India, Motilal Oswal, Nippon Life India Trustee, Axis MF, Kotak MF, and others.

Most of analysts have assigned “SUBSCRIBE” rating to Mankind Pharma IPO, citing opportunities from its newer acquired products and its plan to backward integrate in its power brands. The firm’s growing presence in areas of chronic therapy, and high brand recognition as well as good track record of operational & financial performance also augur well for the company.

Here’s all you need to know about Mankind Pharma IPO:

• The IPO of the country’s fourth largest pharma company by domestic sales will open for subscription on April 25 and close on April 27. This is expected to be the biggest IPO in the pharma sector after the ₹6,480 crore public offer by Gland Pharma in November 2020.    

• The price for the IPO is ₹1,026-1,080 per share, valuing the company at ₹43,264 crore at the top end of the offer price.

• The lot size of the offer is 13 shares, which means the minimum application amount for a retail investor will be ₹14,040 (₹1,080 x 13).

• The Delhi-based drug maker will issue 40.06 million equity shares via the offer for sale (OFS) route. Post share sale, shareholding of the promoters will decline to 76.50% from 79% at present. 

• As the IPO is completely an OFS, the entire proceeds from the issue will be paid to the selling shareholders in proportion to the equity shares offered by them and the company will not receive any proceeds from the scheme.

• The company, which manufactures emergency contraceptive brand Unwanted-72, Gas-O-Fast ayurvedic antacids, and acne-treating medicine AcneStar, is a net debt-free company which generated profit after tax (PAT) of ₹1,030.5 crore in 2019-20, ₹1,253.9 crore in 2020-21, and ₹1,419.2 crore in 2021-22. For the nine-month ended December 31, 2022, the company’s PAT stood at ₹986.9 crore.

• For the financial years 2020, 2021 and 2022, the company's revenue from operations in India amounted to ₹5,788.8 crore, ₹6,028 crore and ₹7,594.7 crore, respectively, representing 98.70%, 97.01% and 97.60%, respectively, of its total revenue from operations. After India, its major markets are the U.S., Bangladesh, Sri Lanka and Nepal. 

• Going ahead, the company plans to expand the scope of its R&D Centres and initiate several new forays. It spent ₹141.49 crore (FY20), ₹170.78 crore (FY21) and ₹213.44 crore (FY22) on R&D, respectively, representing 2.41%, 2.75% and 2.74%, respectively, of its total revenue from operations for such years. The management estimates that the spending will be around 2.5% in the last fiscal (FY23). 

Established in 1991, Mankind Pharma, the country’s fourth largest pharmaceutical company in terms of domestic sales for the financial year 2022, generates 98% of its revenue from India. The company has presence across therapy areas like anti-infectives, cardiac, gastro, respiratory and also in consumer healthcare segments like condoms, acne preparations, emergency contraceptives, pregnancy tests among others. As of December 2022, it employed 4,121 manufacturing workers across 25 manufacturing locations, four R&D laboratories in India. It has a field team of 3,561 field managers and 11,691 medical representatives across India.