Mankind Pharma is planning to launch its initial public offering (IPO) for subscription on April 25, 2023. This is the second IPO of the current calendar year and the biggest IPO in terms of issue size. Before investing in this public issue, it's important to know some key details:
IPO Dates: The offer will open for public subscription on April 25, with a closing date of April 27, 2023. The company will open its anchor book, a part of QIB portion, on April 24, 2023, a day before opening the IPO.
Price Band: The issue's price band has been fixed at Rs 1,026-1,080 per share.
Offer Size: The IPO consists only of an offer for the sale of over 4 crore equity shares by promoters and investors, with no fresh issue portion. The total fundraising by the company will be Rs 4,110.03 crore at the lower price band and Rs 4,326.35 crore at the higher band.
Objectives of Issue: The main objective of the offer is to carry out the offer for sale by the selling shareholders and to achieve the benefits of listing the equity shares on the stock exchanges. All Corpus raised will go to shareholders
Lot Size and Reserved Portion: One can bid for 13 equity shares (min) and in multiples of 13 shares thereafter. The company has reserved 50% of the offer size for qualified institutional buyers, 15% for high-net-worth individuals, and the remaining 35% for retail investors.
Company Profile: Mankind Pharma is in the pharma sector and claims to be India's fourth-largest company in the sector in terms of domestic sales and third-largest in terms of sales volume for MAT December 2022, as per IQVIA dataset. The company develops and manufactures various pharmaceutical formulations across different therapeutic areas, as well as consumer healthcare products. Its main focus is the domestic market, which contributed 97.60% to the revenue from operations in FY22 and grew at a 12% CAGR between FY18-FY22 and 15% in FY20-FY22.
Financial: For the nine-month period ended December FY23, Mankind Pharma reported a consolidated profit of Rs 996.4 crore, falling 20% compared to the year-ago period. Consolidated revenue for 9MFY23 grew by 10.6% YoY to Rs 6,697 crore. On the operating front, it recorded a nearly 13% YoY drop in EBITDA at Rs 1,484 crore, with margin falling 598 basis points compared to the corresponding period last fiscal. However, for the year ended March FY22, the performance was better, though the company experienced operating margin contraction.
Promoters: Ramesh Juneja, Rajeev Juneja, Sheetal Arora, and Rama Juneja are the promoters of the company.
Grey Market Premium: The grey market premium for the Mankind Pharma IPO is currently trading at around Rs 90 before the April 25 IPO.
It's worth noting that around 12.7% of Mankind Pharma's domestic portfolio's total value was under price control in FY22. The Indian government may add more drugs and formulations to the list of price-controlled items, which could have a negative impact on the company's growth in the domestic market.
Mankind Pharma's IPO at the current price will be valued at 32x FY23 annualized earnings. Given the current market situation, the limited upside potential and unfavorable risk-reward ratio may not make it an attractive proposition
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