Taking into account the company’s expanding product offerings in major therapies, a gradual increase in the share of chronic therapies, increasing more brands, improving MR productivity, and the footprint expansion in metro/Tier-I cities, the domestic brokerage has assigned a multiple of 40x on 12M forward earnings, which represents a 30% premium to the pharma sector’s valuation.
Motilal Oswal stated that 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.
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In a span of 30 years, Mankind Pharma has built a robust domestic formulation (DF) franchise and become the fourth largest player by market share and has diversified its portfolio in terms of both therapies and brands.
“Mankind is working on multiple levers to boost growth over the next three to five years by increasing the scope of business in chronic therapies (36% of DF sales in FY24) by expanding niche products in portfolio, enhancing its presence in metro/Tier-I cities (53% of DF sales in FY24), and investing aggressively in brand building in the prescription and consumer healthcare segments,” said Motilal Oswal in its report.
Mankind has considerably outperformed the industry in respiratory therapies, with a 11% sales CAGR versus the industry sales CAGR of 10% over MAT Apr ‘20-24. Its top products in this segment are cough preparation and bronchodilator inhalant preparation.
However, lower-than-expected growth in the DF segment, muted off-take in exports, and a reduced MR productivity are the key risks to the ratings, said Motilal Oswal.
The shares of Mankind Pharma were trading 1.16% higher at Rs 2,248.40 on BSE around 12:30 today.
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