Mankind up 7% ahead of board meet for fund raising; m-cap tops Rs 1 trn

The board is to consider and approve the raising of funds by way of issue of non-convertible debentures, commercial papers, other debt securities or any other security or any combination thereof.

Mankind Pharma surges: Shares of pharmaceutical company Mankind Pharma hit a new high of Rs 2,596, as it surged 7 per cent on the BSE in Friday’s intra-day trade amid heavy volumes ahead of board meeting today to consider raising funds.
 

Mankind Pharma, via an exchange filing said, a meeting of board of directors of the company will be held on September 20, 2024, inter-alia to consider and approve the raising of funds by way of issue of non-convertible debentures (NCDs), commercial papers, other debt securities or any other security or any combination thereof for an amount as may be decided by the Board.

 

Mankind Pharma is engaged in developing, manufacturing and marketing a diverse range of pharmaceutical formulations across various acute and chronic therapeutic segments as well as several consumer healthcare products. It is India’s fourth-largest pharmaceutical company in terms of domestic sales and third largest in terms of domestic sales volumes.

Since August 5, the stock price of Mankind Pharma has rallied 36 per cent after the company on healthy operational performance in June quarter (Q1FY25).

The sharp rally in stock price of the company has seen its market capitalisation cross Rs 1 trillion-mark. At 10:23 AM, with Rs 1.02 trillion market cap, Mankind Pharma was trading 4.5 per cent higher at Rs 2,539.15, as compared to 0.52 per cent rise in the BSE Sensex. The company made stock market debut on May 9, 2023. Currently, Mankind Pharma is trading 140 per cent higher over its issue price of Rs 1,080 per share.

Mankind Pharma has a strategic roadmap for growth through expansion in high entry barrier innovative product launches in the chronic/consumer segment and other adjacencies, transitioning from sexual wellness to consumer wellness in the over-the -counter (OTC) space.

Mankind Pharma has on July 25, 2024, announced the acquisition of 100 per cent stake in Bharat Serums and Vaccines Limited (BSV) at an enterprise value of approximately Rs 13,630 crore. The transaction is expected to close within 3-5 months subject to receipt of regulatory approvals and completion of certain identified conditions precedent. As per the management of Mankind, the acquisition is expected to be funded by a healthy mix of debt, equity, cash surpluses and internal accruals.

Meanwhile, during FY22-24, Mankind’s strategic product launches have focused on chronic therapies such as diabetes, cardiac, gynecology, CNS, and respiratory. Further, it is implementing efforts to deepen its presence in Tier I/ metro cities by engaging with key opinion leaders and forging strategic partnerships with hospitals. In addition to premiumizing products and extensions, Mankind is expanding in the consumer wellness segment via product launches such as Nimulid, Motilal Oswal Financial Services said in the company’s annual report analysis.

Due to growth initiatives through both organic and inorganic means, the  free cash flow to equity (FCFE) and return ratios have been impacted from FY20 to FY24. However, the CFO/ Ebitda ratio improved to about 89 per cent during FY24. However, the brokerage firm anticipates an improvement in FCFE during FY24-FY26, with the increased benefits of initiatives implemented over FY22-FY24. Analysts reiterate ‘Buy’ rating on the stock with a target price of Rs 2,760 per share.

Meanwhile, CRISIL Ratings expects Mankind to achieve low-mid double digit revenue growth rate over the medium term, supported by leading position in key therapies and continued new launches, as well as addition of revenues from BSV.

Due to sizeable debt and liquid surpluses (current balance of around Rs 3,456 crore at March 31, 2024) expected to be utilised for the acquisition, Mankind’s currently robust financial risk profile will undergo a temporary moderation in fiscal 2025. 

The company is however expected to retire a sizeable portion of its debt through a proposed equity raise (already approved by Mankind’s board of directors) and continuing strong annual cash generation, which will help debt protection metrics recover from next fiscal. 

The management has reaffirmed its philosophy to maintain net debt/ earnings before interest, tax, depreciation and amortisation (Ebitda) ratio at under 2x times by fiscal 2026. The same however, remains a key monitorable, CRISIL Ratings said.