Mankind Pharma's Rs 4,326-crore IPO: Issue subscribed 14% on Day 1

Mankind Pharma’s Rs 4,326-crore initial public offering (IPO) — the largest in nearly a year — has got off to a good start. The share sale was covered 14 per cent on Day One, with bids coming from all three categories of investors. The institutional investors subscribed 8 per cent, the wealthy investors 33 per cent, and retail investors by 10 per cent.

A day earlier, the company allotted Rs 1,298 crore worth of shares to 77 anchor investors. Some of them included marquee names like the Canada Pension Plan Investment Board, the Government of Singapore, Goldman Sachs, Fidelity Investments, and SBI Multicap Fund. The anchor investors included 16 domestic mutual funds that participated through 41 schemes.

Market players said following the anchor allotment, the grey market premium for Mankind increased from 5 per cent to 10 per cent. The company’s IPO closes on Thursday. Typically, most bids in an IPO come on the last day.

Mankind, India’s fourth largest pharmaceutical (pharma) firm in terms of domestic sales, has set a price band of Rs 1,026-1,080 per share for the IPO. At the top end, the company will be valued at Rs 43,264 crore — about 30x its 2021-22 earnings.

Analysts say the valuations are in line with other listed pharma players. Yet, the IPO could be a good bet for long-term investors.

“Considering underpenetration of health care services and lower consumer expenditure in health care in India, Mankind’s focus on chronic therapeutic areas, emphasis on increasing penetration in metro and Class I cities, growth in the consumer health care business, good financial performance, and strong distribution network, we assign a ‘subscribe’ rating on a long-term basis,” says a report by Geojit Financial Services.

The IPO is an entirely secondary share sale by promoters, global private equity firm Cairnhill and a few other investors of the firm.

The company sells the Manforce brand of latex, which has a 30 per cent market share, while its pregnancy test kit Prega News has an 80 per cent market share.

The company operates 25 manufacturing facilities across the country and had 4,121 manufacturing personnel as of December 31, 2022. Its formulations manufacturing facilities have a total installed capacity of 42.05 billion units per annum across a wide range of dosage forms, including tablets, capsules, syrups, vials, ampoules, blow-fill-seals, soft and hard gels, eye drops, creams, contraceptives, and other over-the-counter products.

Kotak Mahindra Capital, Axis Capital, IIFL Securities, Jefferies India, and J.P. Morgan India are the book-running lead managers for the offer.