Mankind Pharma –

FY 24 results and Q4 concall updates –

Q4 financial outcomes –

Revenues – 2441 vs 2053 cr ( up 19 pc )
EBITDA – 594 vs 419 cr ( up 42 pc, margins @ 25 vs 20 pc )
PAT – 477 vs 294 cr ( up 62 pc )

FY 24 financial outcomes –

Revenues – 10335 vs 8749 cr ( up 18 pc )
EBITDA – 2550 vs 1913 cr ( up 33 pc, margins @ 24.7 vs 21.9 pc )
PAT – 1942 vs 1310 cr ( up 48 pc )

Net cash on balance sheet @ 3260 cr

Three of company’s brands crossed 100 cr/yr revenues taking the total brands with > 100 cr/yr revenues to 23 !!! Another 40 brands generate sales > 50 cr/yr

Share of chronic portfolio increased to 37 vs 35 pc – thus helping margins. In-licensed Astra Zeneca’s Symicort to boost their chronic portfolio

FY 24 capex spends @ 390 cr

Domestic revenues @ 9522 vs 8453 cr ( up 13 pc )

Consumer healthcare / OTC business revenues @ 706 vs 692 cr. Sluggish growth in this segment due optimisation of channel inventories. Key brands include – Gas O Fast, PregaNews, AcneStar, ManForce, Unwanted72, HealthOK

Exports revenues in FY 24 grew by a whopping 175 pc from 296 to 813 cr YoY ( aided by one off opportunities in US ). Launched 4 new products in US taking the total products in US to 39

Mankind Pharma –

FY 24 results and Q4 concall updates –

Q4 financial outcomes –

Revenues – 2441 vs 2053 cr ( up 19 pc )
EBITDA – 594 vs 419 cr ( up 42 pc, margins @ 25 vs 20 pc )
PAT – 477 vs 294 cr ( up 62 pc )

FY 24 financial outcomes –

Revenues – 10335 vs 8749 cr ( up 18 pc )
EBITDA – 2550 vs 1913 cr ( up 33 pc, margins @ 24.7 vs 21.9 pc )
PAT – 1942 vs 1310 cr ( up 48 pc )

Net cash on balance sheet @ 3260 cr

Three of company’s brands crossed 100 cr/yr revenues taking the total brands with > 100 cr/yr revenues to 23 !!! Another 40 brands generate sales > 50 cr/yr

Share of chronic portfolio increased to 37 vs 35 pc – thus helping margins. In-licensed Astra Zeneca’s Symicort to boost their chronic portfolio

FY 24 capex spends @ 390 cr

Domestic revenues @ 9522 vs 8453 cr ( up 13 pc )

Consumer healthcare / OTC business revenues @ 706 vs 692 cr. Sluggish growth in this segment due optimisation of channel inventories. Key brands include – Gas O Fast, PregaNews, AcneStar, ManForce, Unwanted72, HealthOK

Exports revenues in FY 24 grew by a whopping 175 pc from 296 to 813 cr YoY ( aided by one off opportunities in US ). Launched 4 new products in US taking the total products in US to 39

Aim to continue to grow at 1.3-1.4 time the IPM growth. Company is ranked No 4 in IPM by value. However, its ranked no – 1 going by no of prescriptions ( this is a big achievement and goes to show the extent of company’s penetration among the doctor’s fraternity )

Actively looking out for high entry barrier – acquisition targets to utilise cash on books

Company expects OTC brands to grow in mid teens in FY 25 as one time inventory corrections are now over

Gross margins for full FY 24 at 69 vs 66 pc YoY – very health levels

Guiding for an EBITDA margin range of 25-26 pc for FY 25

The EBITDA margins for export business is comparable to company level EBITDA margins

Expect to grow export business in mid-teens in near future. Aim to get 5-7 approvals / yr in US

Expect 3-4 pc growth contribution in next FY from new product launches – as the company’s new product pipeline for FY 25 is exiting ( including 1-2 big in-licensing opportunities like Symbicort )

At present, only 15 pc of company’s portfolio is under NLEM

Mankind had acquired Panacea Bio’s formulations business in FY 22. That portfolio is growing > 25 pc CAGR. Overall, it has proven to be a very successful acquisition

Astra-Zeneca out-licensing its blockbuster drug to Mankind Pharma alone speaks volumes about company’s distribution and execution capabilities

At present, about 75 pc of company’s products are manufactured in house. Rest are outsourced

As the chronic share in overall sales keeps growing, EBITDA margins should improve over medium term

Aim to maintain the Domestic : International business mix at 90 : 10 in medium term. Not planning to acquire anything in the international mkts

Current field force strength @ 12500 with productivity @ 6.5 lakh vs 6.1 lakh YoY

Not likely to take on Debt beyond 6-7k cr if going for a major acquisition

Disc: hold a tracking position, biased, not SEBI registered

Few points to consider while considering for investing in this company-

Environmental Impact:
Calcium hypochlorite, while more stable in solid form, can also release chlorine gas if mishandled or mixed with incompatible substances.
Green production chemistry involves minimizing environmental impact, reducing waste, and using sustainable resources. Neither calcium hypochlorite nor sodium hypochlorite can be considered entirely “green” due to their chlorine content and potential for environmental harm.

Technological Innovations:

Advancements in production technologies, such as electrochemical methods, may lead to more environmentally friendly ways of producing hypochlorite compounds.

Research into alternative disinfection methods, such as UV disinfection or ozone treatment, may also impact the demand for hypochlorite-based products.

Given the trend of shifting to cleaner chemistries it is important to track the green and sustainability initiatives that the company is taking to reduce its future risks and make its products right to win.

Warming Up to Vinati Organics – Planning to increase allocation to 4% from 2% at present

After Suprajit and Ajanta Pharma, first time I have a feeling that – I have got a candidate to concentrate albeit it’s too early. My typical allocation life cycle is 5-6 years for concentrated positions. Suprajit : 2014 – 2020, Ajanta 2016 – 2023. Vinati, I have started journey in Jan 24

Rationale behind increasing the allocation

1. Clarity emerged as one time gains withered away

From 2017 – 18, there were series of one time windfall gains clouding the true margin profile of the franchise. Lubrizol exit, change of business matrix in covid, chinese supply disruption, aggressive customer stocking – all these events boosted margin profiles in short term but it was not the true reflection of the long term strength of the franchise. In my view – FY 24 margins of 24-25% ( which are decadal low ) is a good starting point to model future trends. Margins can still go down further but I believe we are somewhere at the bottom

2. Journey towards diversification while maintaining the speciality franchise?

From 100% ATBS, IBB portfolio in 2008 – 09, company now has more diversified profile with ATBS/IBB contribution reduced to 55-60%. Company plans to introduce 2-3 new products every year. I do not have strong reasoning yet to decide – “are the new products diluting the speciality franchise or really making it granular?” Example – even after Anti Oxidant being doubly backward integrated to butyl phenol and IB, it is still not matching Chinese prices which can be confirmed from the management response in Q4 FY 24 confall that AO is the only product in the portfolio which is facing pricing pressure

3. Understanding the durability of ATBS/IBB product franchise

This point is also work in progress. Company has shown proven capabilities of scouting, absorbing and re-engineering the third party technologies. For me, proof of pudding still lies in ‘’time’’. If Vinati can defend its ATBS franchise over next 1-2 years when there is more competition is propping up, that itself will act as a good data point to ramp up allocation further

The company plans to nearly double its share of exports from 12% in FY24 to 20-25% in FY25. Exports is a 2-4% higher margin business as compared to domestic business. So you can definitely expect some growth in margins.

30%+ volume growth + margin expansion could help bottomline grow by at least 40%-50% in FY25.