Q3FY24 Review: Mankind Pharma: Multiple levers aiding outperformance versus IPM

5 Feb 2024 , 02:21 PM

Mankind Pharma (Mankind)’s India business growth of 20/13% on a year-on-year basis in Q3/9MFY24, versus IPM growth of 8-8.5%, has been driven by its sustained outperformance in the Chronic segment, sequential recovery in acute sales during Q3, and Modern Trade (MT) & Hospital channel emerging as a new distribution channel for the company over the past few quarters. EBITDA beat of 6% in Q3 versus IIFL estimates would have been even higher, save for GM decline of ~130 basis points sequentially owing to inventory provisions and 10% under-utilization at the Sikkim plant.

On the back of consistent volume-led outperformance in the domestic market, further increase in Chronic revenue share in metros (55% for Mankind versus 70% for IPM) and strong brand building capabilities, analysts at IIFL Capital Services expect Mankind to deliver 13%/18%/19% Revenue/EBITDA/EPS CAGR over FY24-27. 

Assuming a 15% growth in the base Exports business and a 50% decline in the one-off product in FY25, analysts at IIFL Capital Services expect Mankind’s overall exports business to decline 2% in FY25 over FY24. Post that, they have factored 15% CAGR in export sales.

They have upgraded their EPS estimates by 2-3% and value the stock at ~35x FY26 estimated EPS to arrive at their Target Price of ₹2,460 (21% upside). Mankind, JB Pharma and Torrent are their preferred picks among the India-focused players.