Mankind Pharma Ltd surges 23% in Mumbai debut after a $529 mn IPO

By Filipe Pacheco and Ashutosh Joshi

Mankind Pharma Ltd. rallied 32% on its first day of trading in Mumbai after raising 43.3 billion rupees ($529 million) in one of India’s largest initial public offerings of the year.
 

The drug and contraceptive maker’s stock jumped to as high as 1,430 rupees on Tuesday before closing at 1422.30 rupees. Its shareholders had sold 40 million shares at 1,080 rupees apiece at the IPO, the top of a marketed range that started from 1,026 rupees. Macquarie Research initiated coverage on the stock with an outperform rating. 

The strong debut comes after anchor investors like Canada Pension Plan Investment Board, Government of Singapore and Abu Dhabi Investment Authority together subscribed to nearly 13 billion rupees worth of shares in the offering. The company didn’t sell any new stock.

Mankind’s deal marks the return of mid-to-large-sized debuts in India. Its performance could help improve appetite for new share sales in the South Asian nation, following a 13% drop in year-to-date IPO proceeds compared to the same period in 2022. India’s benchmark NSE Nifty 50 Index is outperforming a broader gauge of emerging-market equities this quarter.

“The primary market saw an IPO hitting after a long gap,” thus the high interest in the stock, said Hemang Jani, head of equity strategy at Motilal Oswal Financial Services Ltd. The healthcare sector has also seen good traction over the last two months and given the company’s “healthy financial track record, domestic focus and extensive network, Mankind is likely to continue doing well.”

Excluding offerings by real estate investment trusts, the IPO is India’s largest since Delhivery Ltd.’s listing about a year ago. Mankind’s jump was the biggest increase for the first day of trade in India since Zomato Ltd.’s 66% surge in July 2021.  

Continued sales outperformance in India and a focus on chronic therapies will be among the key drivers for Mankind, Kunal Dhamesha, an analyst at Macquarie Capital Securities India, wrote in a note.

Still, strong institutional demand for the IPO may not guarantee a sustainable performance for the stock. “I still think the rally will be short lived, especially if broader market weakens” said Tina Banerjee, a global healthcare analyst that publishes on the SmartKarma platform. 

Over the past five years, Mumbai listings larger than $500 million have on average declined 8.2% in their first day, data compiled by Bloomberg show. 

India’s market is awaiting more listings of similar size, including from real estate investment trust Nexus Select Trust and stationary company Doms Industries.

Founders of Mankind and affiliates of private equity investors Capital International Group and ChrysCapital sold their shares in the IPO. Kotak Mahindra Capital Co., IIFL Securities Ltd., Jefferies India and JPMorgan India arranged the offering.