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Systematix Research Report
Mankind Pharma Ltd.'s Q1 FY24 earnings beat expectations and were largely driven by a surge in exports (up 213% YoY). The export opportunity is driven by a special situation and should taper off in coming months / quarters.
India branded prescription formulation business grew 14% YoY and was slightly above our expectation of 13%. However, the consumer healthcare business growth was lackluster at 8% YoY.
We have slightly revised our forecasts owing to the change in export trend and now estimate 14% /24% / 28% compound annual growth rate over FY23 –FY25 in sales, Ebitda and net earnings for Mankind.
We retain 27x multiple on FY25E earnings per share to arrive at target price of Rs 1,433. We lower our rating from 'Hold' to 'Sell' at CMP.
We refrain from assigning a higher multiple, as we expect the earnings growth to taper post FY25 as operating leverage would have largely played out.
Mankind's positioning as an affordable brand has allowed them superior volume growth versus peers, but on the flip side it restricts the upside on the margin. Mankind pharma has a healthy cash position and how they deploy it for growth will be a key strategic lever.
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