Mankind Pharma IPO subscribed 8% so far on Day 1; GMP down 30% in 10 days

The Rs 4,326-crore public issue's price band is set in the range of Rs 1,026-1,080 per share. The issue will close on Thursday, April 27

India's fourth largest pharma company Mankind Pharma's initial public offering (IPO) has garnered lukewarm response from investors so far on day one of the offer. Till 3:30 PM, retail investors led the charge as they subscribed up to 0.08x (times) of the issue, followed by 0.18x from the non-institutional investors (NIIs), and nil from qualified institutional buyers (QIBs).
 

Analysts said that they remain watchful of the tepid response from the NIIs and QIBs, and hope for a turnaround on the last day of the issue.
 

The Rs 4,326-crore public issue's price band is set in the range of Rs 1,026-1,080 per share, and will close on Thursday, April 27.


 

In the grey market, shares of Mankind Pharma enjoyed a premium of Rs 70 on Tuesday, which implied a likely listing price of Rs 1,150 per share on the upper price band. The grey market premium (GMP), however, has declined 30 per cent for Mankind Pharma in the past ten days, with the maximum GMP being Rs 100 on April 14, according to ipowatch.in.

That said, analysts believe the listing pop for Mankind Pharma would be determined by primary market activity, and subscription numbers on the last day given a slowdown in primary markets, and otherwise volatile market conditions, 
 

Meanwhile, most brokerages have a 'subscribe' rating on the offer as the company's moderate valuations, complete offer-for-sale (OFS) nature, and bulky size make it an interesting play in the primary markets. 
 

"The issue's complete OFS nature and its bulky size make it an interesting watch, amidst current volatile sentiments in the primary market. Boasting stable Ebitda (earnings before interest, tax, depreciation, and amortisation) margins of 25.7 per cent and a profit after tax (profit-after-tax) margin of 18.6 per cent for FY22, the company's valuations appear moderate at 32.56x price-to-earnings ratio (P/E) based on FY23 annualized figures," said Manan Doshi, co-founder, Unlisted Arena.

Analysts at ICICI Securities, too, recommend investors 'subscribe' to the public issue as it is valued at 32.5x P/E on annualised earnings-per-share (EPS) of Rs 33.2. 

"We assign 'subscribe' on the back of opportunities from its newly acquired products,  plan to backward integrate in its power brands, and structural preference for domestic branded formulations," they wrote in a recent note.
 

Those at Geojit Financial, too, recommend to 'subscribe' to the issue, due to Mankind's focus on chronic therapeutic areas, growth in consumer healthcare business, good financial performance, and strong distribution network.

"At the upper price band of Rs 1,080 per share, Mankind Pharma is available at a P/E of 30x (FY22), which appears reasonably priced compared to peers like Sun Pharma, Zydus Lifesciences, Cipla, and Torrent Pharma," the brokerage firm added.