Jefferies Upgrades Mankind Pharma To Buy, Lifts TP After Strong 4Q, Robust Outlook

Global brokerage Jefferies upgraded Mankind Pharma Ltd. to Buy from Hold and raised its base case target price to 2,430 rupees from 2,010 rupees per share.

Jefferies said the Indian pharmaceutical company’s 4QFY24 revenue of 24.4 billion rupees (+19% YoY) was 2% above its estimates, while EBITDA of 5.9 billion rupees (+42% YoY) was 8% above estimates and net profit of 4.7 billion (+65% YoY) was 26% above estimates.

EBITDA and net profit delivered healthy beat on stronger EBITDA margins, which were boosted by higher chronic products sales in India and exports, it added.

The brokerage said Mankind guided for mid-teens growth in exports and India consumer healthcare division for FY25.

For India, the company expects a 4%-5% growth from price hikes and 3.5%-4% from new product launches, which implies at least low double-digit growth for India formulations, it added, noting that for EBITDA margin, Mankind guided for 25%-26%.

Jefferies said Mankind has also taken an enabling resolution for raising as much as 750 billion rupees via qualified institutional placement for potential M&A opportunity. It added that recent news reports suggest that Mankind is in talks to acquire Bharat Serums and Vaccines Ltd.

Mankind said it will target M&A only in high-entry-barrier businesses, which are EBITDA accretive and net debt/EBITDA not exceeding 2x-2.5x, the brokerage noted.

“Strong India positioning, improving share of chronic therapies and robust execution makes Mankind amongst the best-in-class India franchise companies,” Equity Analyst Alok Dalal and Equity Associate Dhawal Khut said in the investor note. “We think Mankind has the potential to consistently outperform industry growth and improve margins consistently.”

Jefferies raised its FY25/FY26 EPS estimates for Mankind by 6%/10% on higher margins. The brokerage has a target price of 2,870 rupees on the stock, based on its upside scenario assumptions.

Mankind closed at 2,092.55 rupees on the National Stock Exchange in Mumbai trading yesterday.

(Send feedback to editor@cornerofficejournal.com)