Multibagger stock: Mankind Pharma hits fresh highs after Q2 results; is more steam left?

Shares of Mankind Pharma surged in Wednesday's trade to scale new 52-week highs after the company announced a strong set of performance in the September 2024 quarter. Brokerages tracking the stock continue to remain positive on the stock.

Mankind Pharma reported a 30.4 per cent year-on-year (YoY) jump in net profit at Rs 653.5 crore for the second quarter that ended September 30, 2024. The drug major had posted a net profit of Rs 501 crore in the year-ago period, said the company in a regulatory filing.

Following the announcement of Q2FY25 results, shares of Mankind Pharma Ltd surged more than 6.2 per cent to Rs 2,882.75, hitting a new all-time high. The company commanded a total market capitalization of Rs 1.15 lakh crore. The scrip had settled at Rs 2714.40 in the previous trading session on Tuesday.

Mankind's branded prescription business grew 10 per cent YoY in India, largely driven by chronic therapies viz. Cardiac and Anti-diabetes. Acute segment continued to see muted growth on account of regulatory headwinds in certain products, said Antique Stock Broking, which was a 'buy' rating on the stock with a revised target price of Rs 2,827.

"However, its consumer healthcare business reported a revenue growth of 20 per cent YoY, higher growth was on account of improvement in volume in key brands viz. Manforce, Gaso-fast, and HealthOk. Export segment growth continues to surprise positively with the revenue growing at 57 per cent YoY, US generics remains its key growth driver," it said.

The pharma player's revenue from operations increased 13.6 per cent YoY to Rs 3,076.5 crore against Rs 2,708.1 crore in the corresponding period of the preceding fiscal. Ebitda for the quarter surged 24.5 per cent YoY to Rs 850 crore in the second quarter of this fiscal, while margins expanded 240 basis points to 27.6 per cent for the reported period.

Mankind Pharma is working on multiple growth drivers including increasing share of chronic therapies, driving sustainable growth in the Rx segment; higher penetration in Tier-I/Metro cities; expanding offerings/adding distribution models of consumer wellness brands; developing digital platforms to enhance doctor-MR engagements; and enhancing niche portfolio offerings through inorganic/in-licensing strategies, said Motilal Oswal.

"It continues to deliver a better growth rate than the industry in the Rx-prescription business, supported by a niche portfolio and superior execution in chronic therapies. However, this was partly offset by the pricing impact on certain brands and festival/seasonality in acute therapies," said Motilal Oswal with a target price of Rs 3,140 on the stock with a 'buy' rating.

Mankind Pharma's domestic revenue stood at Rs 2,796 crore, marking an 11 per cent YoY increase, and exports grew 57 per cent to Rs 281 crore. However, regulatory headwinds in select acute segment products and field force optimisation initiatives impacted overall growth slightly.

Mankind delivered a healthy performance in 2QFY25, driven by sustained traction in exports and a smart recovery in OTC sales, said Kotak Institutional Equities. "Despite estimating a 16 per cent and 7 per cent EPS dilution in FY26E and FY27E for Mankind due to the BSV deal, we reiterate that this specialty acquisition strengthens Mankind’s presence in fast-growing but high entry-barrier therapeutic segments," it said.

Under Mankind, Kotak expects BSV’s portfolio to increase at a healthy over 20 per cent CAGR in the next few years, with robust over 30 per cent Ebitda margins, it said with an 'add' with a fair value of Rs 2,855 on the stock.

Mankind’s (ex-BSV) growth visibility in India (acute recovery and scale-up in chronic segment), exports growth momentum, and margin expansion for each FY25/26/27 stay, said HDFC Securities. "Factoring in Q2 and BSV business, we have cut EPS by 7 per cent for FY25 and 26E, and revised target price to Rs 2,900," it said with an 'add' rating.

Shares of Mankind Pharma were listed in May 2023, when the company raised a total of Rs 4.326.36 crore via its IPO. It sold its shares for Rs 1,080 apiece. The stock has zoomed more than 165 per cent from its IPO price so far.