Mankind Pharma shares skid 4% amid block deal buzz

Extending losses for the third straight session, shares of Mankind Pharma tumbled over 4% in early trade on Tuesday, in an otherwise positive broader market. The counter witnessed a surge in selling activities, with around 3.5 crore shares, or 8.7% equity, exchanging hands in a block deal. The names of sellers were not immediately known, but three private equity funds, namely Chrys Capital, Capital Group and Everbridge Partners, were reportedly looking to sell stakes worth at least $592 million in the pharma company via the block deal.

Amid block deal buzz, Mankind Pharma shares declined as much as 4.5% to ₹1,832.30 after opening lower at ₹1,849.05 on the BSE. On Monday, the stock ended 1.7% lower at ₹1918.75 per share on the BSE.

At the time of reporting, the stock was down 3.2% at ₹1,856.50, with a market capitalisation of ₹74,429 crore.  On the volume front, 1.7 crore changed hands over the counter as compared to two-week average of 8,895 stocks.

Mankind Pharma, which made its debut in May this year after raising ₹4,326 crore via IPO, touched its record high levels of 2,039.95 on November 21, while it slipped to its lowest mark of ₹1,240.75 on May 22. The laregcap stock trades around 70% higher than its initial public offering (IPO) price of ₹1,080 per share. 

As per the report, these three PE investors were mulling selling stake worth $592 million or 6.9% of equities, with an option to go up to $677 million, or 7.9% equity stake. The floor price for the deal was ₹1,785.65 per share, a discount of 7% to Monday’s closing price of ₹1,920.05 apiece on the NSE.

According to Nuvama Alternative & Quantitative Research, there would be a sharp increase in free-float post such block deals. The current free float for Mankind Pharma stands at 10%. "If the revised shareholding for the December quarter is reported on the exchanges by January 17, 2024, along with a surge of over 18% in the stock price to over ₹2,250 levels till January 17, it could position Mankind Pharma for an inclusion in the MSCI Standard index during its February 2024 review," Nuvama Alternative says in a report.

As per the report, the inclusion of Mankind Pharma in the MSCI Standard index, which is due on December 15, 2023, will lead to inflow of around $28 million (1.2 million shares, five days impact).  

For Q2 FY24, Mankind Pharma reported a 19.4% YoY rise in second-quarter profit at ₹501.03 crore, driven by higher domestic sales and steady growth in the company's chronic drugs segment. The revenue from operations grew 11.6% to ₹2,708.10 crore, as against ₹2,425.84 crore in Q2 FY23. The domestic revenue was up 7% YoY at ₹2,529 crore, export revenue stood at ₹179 crore, registering a YoY growth of 159%. On the operational front, the EBITDA revenue was up 15% YoY to ₹686 crore, with a margin of 25%.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)