Mankind Pharma IPO attracted bids worth Rs 46,400 crore; will it revive primary markets?

Mankind Pharma, whose Rs 4,326 crore initial public offering (IPO), closed for subscription on Thursday, April 27, received a strong response from the investors, particularly the qualified institutional bidders (QIB). On the contrary, the retail investors' portion failed to get a full subscription.

The issue was overall subscribed 15.32 times, wherein the QIB portion saw bidding for over 49.16 times. The institutional bidders had an allocation of 50 per cent during the bidding process. Their quota of 80.11 lakh equity shares, saw a bidding of more than 39.38 crore equity shares. The allocation worth Rs 865.27 crore (at the upper price band) was bid at Rs 42,534.08 crore.

Among the other segment of investors, non-institutional bidders had over 60.08 lakh equity shares (15 per cent of the net offer) worth Rs 648.95 crore reserved for them. Their portion was subscribed 3.8 times and it means that they made a bid worth Rs 2,464.86 crore or 2.82 crore equity shares during the bidding process.

Retail investors, who had an allocation of 35 per cent, subscribed merely 92 per cent. For the allocation of 1.4 crore equity shares worth Rs 1,514.22 crore, investors made bids for only 1.28 crore equity shares worth Rs 1,388.45 crore. Mankind Pharma had fixed the price band at Rs 1026-1,080 with a lot size of 13 equity shares.

Overall, the issue of 28.04 crore equity shares fetched bids for 42.95 crore equity shares. It means shares worth Rs 3,028.45 crore attracted bids worth Rs 46,387 crore. This excludes the anchor book, where Mankind Pharma raised Rs 1,297.91 crore by allotting 1.20 crore equity shares to 77 anchor investors, including global funds, domestic mutual funds and insurance companies.

Needless to say, Mankind Pharma has received a strong response from the investors, perhaps the best among last few issues as the rising interest rates pumped out excess liquidity from the economy and new IPO rules pushed out the chances of making a quick buck from the primary markets.

Domestic primary markets, on the other hand, failed to attract investors as not many issues gave them a listing gain and majority of the issues failed to deliver decent returns even in the longer run. Amid this, strong bidding for Mankind's big-ticket IPO came in as a surprise to many.

Palka Arora Chopra, Senior Vice President at Mastertrust believes that it has reported a strong performance in recent years. "There is a good runway for growth. The key factors affecting the growth of the IPM are rising income levels, increasing life expectancy, consumer awareness of preventive healthcare, growth in lifestyle diseases and government initiatives," he said.

Chopra highlighted a strong consumer healthcare franchise with brand recall, the domestic-focused business of scale with potential for growth, increasing cash flow, high entry barriers, control and a professional and experienced management team as the key strengths of the company.

Bidders who could not get allotment in the IPO may see the initialisation of refunds on May 04. Others, who would be allotted shares may see the credit of shares, in the demat account by May 05. The listing of the IPO is likely on May 08.

Market analysts believe that a positive response to Mankind Pharma's IPO may set a trend and revive the dull primary market activity, despite FII's offloading the Indian equities in the last few months. Long-term growth stories will attract investors, they said.

SK Hozefa, CEO at Tradeplus said, "Despite FIIs selling during the current year, Mankind Pharma's IPO received positive response from the investors. This shows that investors have a renewed interest and a resilient mindset towards long-term investments, despite the market volatility."

It is evident that investors are looking beyond short-term market fluctuations and are instead focusing on the potential for long-term growth and profitability. The success of Mankind Pharma's IPO is a clear indication of this trend, which is a positive sign for the Indian equity market's future, he said.