Mankind Pharma –

Q2 FY 25 results and concall highlights –

Revenues – 3077 vs 2708 cr, up 14 pc
Gross Margins @ 71.6 vs 69.5 pc
EBITDA – 850 vs 683 cr, up 24 pc ( margins @ 27.7 vs 25.2 pc YoY )
PAT – 659 vs 511 cr, up 30 pc

Cash on books @ 4255 cr on 31 Sep vs 3260 cr on 31 Mar

Domestic : International sales @ 91:9

Sales breakup –

Domestic formulations – 2564 cr, up 10 pc
Consumer OTC products – 232 cr, up 20 pc
International formulations – 281 cr, up 57 pc

Share of Chronic sales @ 38 vs 37 pc YoY ( Chronic therapies often have substantially higher margins vs Acute therapy segments ). Company’s chronic share in FY 18 was @ 28 pc

Company’s rank in IPM in their strong therapies –

Cardio – 4
Anti-Diabetic – 5
Anti-Infectives – 4
GI – 4
Respiratory – 5

Company is currently ranked 4th in the IPM

OTC sales growth in Q2 led by strong growth in – Manforce, GasOFast, HealthOK brands. There OTC brands like – AcneStar, PregaNews, Unwanted72 are also doing well

Some of the speciality brands launched by the company in last 2 yrs –

Neptaz ( heart failure ) – in-licensed from Novartis

Crenzlo ( high LDL ) – in-licensed from Novartis

Nobeglar ( type 1 Diabetes ) – in – licensed from Biocon

Combinable ( Obstructive pulmonary disease ) – acquired from DRL

Symbicort ( Obstructive pulmonary disease ) – exclusive distribution arrangement with AstraZeneca

Daffy ( Pediatric skin and hair care ) – acquired from DRL

Vonatime + Vonalong ( Gastroesophageal reflux disease ) – in – licensed from Takeda

Company had acquired Bharat Serum and Vaccines in Q2. The consolidation of BSV results with Mankind shall begin wef Q3. Their high entry barrier, difficult to make, speciality products in Women’s healthcare and Critical care are expected to drive a lot of growth for Mankind Pharma in India and EMs. Their products are going to be EBITDA accretive for Mankind Pharma

Company aims to maintain Net Debt / EBITDA ratio below 2 while funding this acquisition. Hence is expected to raise some equity for the said acquisition

R&D expenses in Q2 were at 2 pc of sales

Company has raised a Debt of Rs 10k cr @ avg interest rate of 7.7 pc in order to fund the BSV ltd’s acquisition. Company intends to retire a part of this debt via the equity raise that they have planned

BSV business has multiple growth levers that can be exercised immediately. These are – organic base business growth of BSV, improvement in MR productivity ( which is sub-optimal at present ), distribution expansion under Mankind. The Gross Margins of BSV’s brands is > 70 pc ( similar to Mankind’s business )

Company’s brand of Dydrogestrone ( generic of Abbott’s Duphaston ) – Dydroboon grew at > 20 pc in Q2 YoY

Company is guiding for 15 pc kind of topline growth for the BSV’s business in FY 25 with EBITDA margins in the vicinity of 26-28 pc for full FY 25 ( FY 24 revenues were 1723 cr )

In the OTC business, expect high single digit growth this FY and double digit growth in FY 26. OTC business is expected to clock EBITDA margins in the range of 18-20 pc for foreseeable future

Company intends to retire all the debt that its taking up for the BSV’s acquisition

Company also has some non-core assets that the company is planing to sell off to further accelerate the debt repayment. Should be able to get 600-650 cr valuation on these non-core assets

The equity raise for the BSV acquisition should be around 3000 cr

The overall export sales should grow @ > 20 pc for BSV’s portfolio ( across mkts – ASEAN, LATAM, GCC etc ). BSV export business’s export margins are > domestic margins

The exports that Mankind is doing have EBITDA margins of around 20-21 pc ( higher than their OTC but lower than their domestic formulations business )

Oral contraceptives have now been brought under price controls. This has led to price erosion in the company’s brand – Unwanted 72

Disc: holding, biased, not SEBI registered, not a buy / sell recommendation