Mankind Pharma - Disruptor With A Dose Of Care; Motilal Oswal Initiates Coverage With A Buy

Motilal Oswal Report

In a span of 30 years, Mankind Pharma Ltd. has built a robust domestic formulation franchise and become the fourth largest player by market share.

Contrary to common wisdom, Mankind Pharma has followed a disruptive strategy to establish its DF business by approaching customers and influencers in tier II and below cities, becoming the industry leader in terms of the number of prescriptions.

It has diversified its portfolio in terms of both therapies and brands.  Mankind Pharma is working on multiple levers to boost growth over the next three to five years:

1. increasing the scope of business in chronic therapies (36% of DF sales in FY24) by expanding niche products in portfolio,

2. enhancing its presence in metro/tier-I cities (53% of DF sales in FY24), and

3. investing aggressively in brand building in the prescription and consumer healthcare segments.

Accordingly, we expect a 16% earnings compound annual growth rate for Mankind Pharma over FY24-27. Considering its strong brand visibility, sustainable earning growth and superior return ratios, we value Mankind Pharma at 40 times 12 months forward earnings (30% premium to the Healthcare sector PE) to arrive at a target price of Rs 2,650.

Initiate coverage with a Buy rating.

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