Mankind Pharma Q4 Results Preview: Tariff-Related Risks, Potential Margin Pressure In Focus

Mankind Pharma Ltd. is set to announce its financial results for the January-March quarter on Wednesday. Brokerages expect domestic business growth and Bharat Serum Vaccine's growth as the key focus areas in earnings. However, concerns remain around tariff-related risks and potential margin pressure.

The fourth quarter is a sequentially weak quarter for acute-heavy players in India, particularly for companies like Cipla, Alkem and Mankind whom seasonality in the domestic business will likely drive quarter-on-quarter decline in Ebitda margins, as per brokerage reports.

As per Bloomberg estimates, Mankind Pharma's consolidated revenue for the March quarter is expected to rise 26.8% year-on-year to Rs 3,095.7 crore, compared to Rs 2,441.10 crore a year ago.

The company's net profit is expected to fall 22.3% to Rs 366 crore for the quarter.

Ebitda is likely to rise 15.8% to Rs 791.34 crore from Rs 683.23 crore, while margin is expected to contract to 25.6% from 28% a year ago.

Mankind Pharma Q4 Preview (Consolidated, YoY)

• Revenue seen 26.8% higher at Rs 3,095.7 crore versus Rs 2,441.10 crore.

• Net profit seen at Rs 366 crore versus Rs 471.24 crore.

• Ebitda seen 15.8% higher at Rs 791.34 crore versus Rs 683.23 crore.

• Margin seen at 25.6% versus 28%.

Brokerage Views 

BofA | Target Price: Rs 2,350.5

• BofA's price objective of Rs 2,250 is based on 21.3 times FY27E EV/Ebitda, which is a set at 15% premium to 5-year multiples of domestic-focused firms (18.5times).

• The brokerage values the company at premium to peers given it has a higher domestic mix and strong growth so far. Post listing the stock has re-rated to a significant premium to peers.

• The risk to margins due to increasing competitive intensity, limited track record of M&A execution, and a short trading period are not factored in the valuation post the sharp re-rating since listing.

• Key upside risks include—significant revenue growth outperformance versus the brokerage's estimate. Better than expected margin execution in the next few quarters increasing investor confidence on execution. Better than expected performance on the BSV acquisition.

• Key downside risks include slower than expected industry growth, regulation related to generic prescription, doctor promotion that can structurally de-rate domestic valuation. Another downside risks also include higher SG&A investment to support domestic outperformance.

IIFL Captal| Rating: Buy | Target Price: Rs 2,850

• Mankind Pharma is amongst the brokerage's top picks in the pharma sector given its strong branded generic businesses and limited exposure to the US generic market.

• Assumed organic Rx growth of 9% year-on-year driven by sustained outperformance versus IPM and a strong 25% growth in CHL business due to easy base of last year.

• BSV's domestic revenue will contribute 8.7% to India revenue in fourth quarter.

• BSV acquisition driven strong growth in exports business. BSV's export revenue will contribute 7% to overall revenue in fourth quarter.

• The brokerage projects 9% quarter-on-quarter decline in organic revenue versus overall exports growth of 5% quarter-on-quarter in fourth quarter.

JP Morgan| Target Price: Rs 3,150

• JP Morgan expects domestic formulations to be soft (+6% year-on-year) due to weakness in the IPM and impact of ongoing corrective measures.

• As per the brokerage per IQVIA, India growth QTD is trending at 5% year-on-year, 120 bps lower versus Indian Pharma Market.

• However, the consumer segment and exports are likely to post healthy mid to high teens growth.

• On BSV, the brokerage expects sequential growth due to Q4 being a full quarter post integration, but overall growth likely to be flat in FY25 due to restructuring.

• JP Morgan forecasts Ebitda margins to remain flat year-on-year at 24% but decline 350 bps quarter-on-quarter due to weaker seasonality.

Axis Capital

• Ex-BSV, the brokerage expects overall top line growth of 7-8%, India business expected to deliver 7% growth on ex-BSV basis (vs 6% growth, as per IQVIA) in the backdrop of corrective measures implementation for acute division.

• Consumer segment expected to show similar growth momentum as delivered in Q3 (-29% year-on-year).

• Consolidated sales to grow 25% year-on-year and Ebitda margins to improve 200 basis points year-on-year to 26.2% on better product-mix, margin-accretive BSV business partly offset by integration-related costs.