Mankind Pharma is the latest pharmaceutical company to make a name for itself within just a month of listing. The stock debuted with a bang at an over 20 percent premium to its issue price on May 9. As of closing price on June 12, the scrip was still trading 36.5 percent above the upper band of its issue price of Rs 1,026-1,080.

The company’s Rs 4,326-crore public offer was the biggest initial public offering (IPO) in 2023 so far and also the largest by a pharma company after Gland Pharma’s Rs 6,480-crore IPO in 2020. The company’s share sale also coincided with improving sentiments for the pharma sector, riding high on expectations of a strong turnaround for a space that has remained a mere defensive play in recent years.

A month after its listing, the Street seems to be still enamoured of Mankind Pharma as several domestic and foreign institutional players are rushing to grab a pie of the drugmaker. As per Nuvama Alternative & Quantitative Research’s Insurance Portfolio Analyser, the stock was among the top additions by five prominent insurance houses in May, with investments to the tune of Rs 103 crore. The five insurance houses analysed in the report make up over 75 percent of life insurance AUMs (assets under management) in India.

Even mutual funds (MFs) are attracted to Mankind Pharma as reflected by Emkay Alternative and Quantitative Research’s Monthly Institutional Flow Tracker. The report reveals that Mankind Pharma was among the top two large-cap stocks to see maximum inflows of Rs 1,590 crore from MFs in May. It is also worth noting that healthcare was the sector that saw the maximum increase in exposure by MFs in the month, to the tune of Rs 1,900 crore.

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Seeing the solid traction received by Mankind Pharma, one has to wonder what the company offers. Here are some of the factors:

Strong domestic presence

Mankind Pharma is the second largest domestic pharma company in terms of volume, and global research and broking firm Macquarie believes it is well positioned to double its bottom line by FY26.

At a time when export markets, especially the US, are struggling to punch in solid growth numbers, Mankind Pharma’s heavy reliance on the domestic market only strengthens its growth potential.

The Indian pharma market is expected to deliver double-digit growth in coming years and that puts Mankind Pharma on a strong upward trajectory. Nirmal Bang highlighted that Mankind derived nearly 98 percent of its revenue from domestic formulations in FY22. Hence, analysts are all the more bullish on the stock due to its pure play on the domestic market, with strong financials and better visibility.

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As per IQVIA data, the company’s revenue grew at a compound annual growth rate (CAGR) of around 12 percent, outpacing industry growth of around 10 percent. The stellar growth is aided by robust demand in its chronic medications segment, strong positioning in the acute segment, and new product launches. Most analysts believe the company is all set to benefit from the strong growth expected in the Indian pharma market, thanks to its strong positioning in the home market.

“Mankind is one of the fastest growing domestic pharma names as it has consistently outperformed peers, primarily led by strong volume growth,” JPMorgan stated in its report. The firm also expects the company to continue to gain market share, with a forecast for revenue/earnings CAGR of 15-22 percent over FY23-26.

Extensive distribution network

The company also boasts one of the largest and most extensive distribution networks in the domestic market, which consists of over 11,500 medical representatives (MRs) and 3,500 field managers as of December 2022. The vast expanse of its distribution network has helped the company penetrate the domestic market across metro and tier I-IV towns.x

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Mankind has leveraged its MR network and currently ranks first in terms of prescriptions generated in the Indian pharmaceuticals market, as highlighted by Nirmal Bang Institutional Equities.

A booming chronic segment

The company’s trend of outperforming industry growth has been driven by its thriving chronic medication segment, which accounted for 35 percent of domestic revenue. The company has even bigger plans for its chronic segment as it aims to take its revenue contribution higher.

The company is focused on increasing its revenue share from the chronic segment through field force expansion, growth in the recently acquired Panacea Biotec’s portfolio and the licensing deal with Novartis.

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Baking that in, BNP Paribas forecasts steady double-digit growth momentum for the company over FY23-26 on the back of its continued growth outperformance.

The upbeat sentiment for Mankind Pharma can be felt across the Street as data from Bloomberg reveals that the company enjoys seven buy calls and just one hold rating out of the total eight brokerages that cover the stock.

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