Disruptor with a dose of care
In a span of 30 years, Mankind Pharma (MANKIND) has built a robust domestic formulation (DF) franchise and become the fourth largest player by market share.
Contrary to common wisdom, MANKIND 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.
It 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: a) increasing the scope of business in chronic therapies (36% of DF sales in FY24) by expanding niche products in portfolio, b) enhancing its presence in metro/Tier-I cities (53% of DF sales in FY24), and c) investing aggressively in brand building in the prescription and consumer healthcare segments.
Accordingly, we expect a 16% earnings CAGR for MANKIND over FY24-27. Considering its strong brand visibility, sustainable earning growth and superior return ratios, we value MANKIND at 40x12M forward earnings (30% premium to the Healthcare sector PE) to arrive at a TP of INR2,650. Initiate coverage with a BUY rating.
