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Systematix Research Report
Mankind Pharma Ltd.'s revenue of Rs. 27,081 million was in line with estimates, but growth in India was lower than our expectations, which was offset by strong performance in exports which continues to be driven by a one-off opportunity.
Growth in India branded prescription business and consumer business was weak - 7.8% and 1.6% respectively and was attributable to a weak season and channel inventory optimization respectively.
Consumer business remains a focus area of the company and it intends to grow double digit in the category. Gross margins improved QoQ by 130 basis points, which was attributable to cost optimization and price increases taken during the quarter.
Other expenses witnessed a steep surge (14% QoQ) and hence Ebitda margin declined 20 bps QoQ despite gross margin expansion.
Higher spend on advertisements led to an increase in other expenses and the same should normalise in subsequent quarters.
We retain our forecasts on Mankind Pharma and maintain our price target of Rs 1,433 based on 27 times multiple on FY25E earnings per share. We retain our 'Sell' rating and 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.
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