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Informist, Wednesday, Jan. 22, 2025

By Rajesh Gajra

NEW DELHI – Mankind Pharma Ltd. is seen reporting weak bottom line in the quarter ended December both sequentially and on a year-on-year basis because of higher operating expenses, acquisition, and operating costs following the acquisition of Bharat Serums and Vaccines Ltd. The acquisition will, however, boost the overall top line growth of the prescription drugs, and other pharmaceutical and over-the-counter products maker. The profitability metrics are also seen weakening sequentially but steady over the year ago quarter.

According to an average of estimates by five brokerages, the company is expected to report a fall of 28% sequentially in its consolidated net profit and a year-on-year increase of 3.4% to INR 4.69 billion in the December quarter. Motilal Oswal Financial Services has the highest estimate of INR 5.66 billion for net profit while the Kotak Securities' institutional equities team has the lowest estimate of INR 3.52 billion.

The top line is seen at INR 32.42 billion, up 5.4% sequentially and 24.4% on year, with the estimates ranging from a low of INR 30.95 billion by Nirmal Bang Equities to a high of INR 33.58 billion by Motilal Oswal. The earnings before interest, tax, depreciation and amortisation is seen at INR 8.44 billion.

The expected decline in net profit of 28% sequentially is the worst outcome in eight quarters and the expected on-year increase of 3.4% is also the lowest in eight quarters.

Mankind Pharma's prescription portfolio of over 500 products covers a range of formulations across various acute and chronic therapeutic areas. The firm exports over 1,000 pharma products to around 15 countries.

In the September quarter, Mankind Pharma's consolidated revenue from operations increased 13.6% on year and 6.3% on quarter to INR 30.77 billion and the net profit jumped up 30% on year and 22% sequentially to INR 6.53 billion.

According to Kotak Securities, Mankind Pharma's organic domestic revenue will likely rise 10% on year on the back of 10% on-year increase in organic domestic formulations segment sales in the quarter ended December. Organic revenue growth refers to percentage change in like-to-like segments and products, and will, therefore, exclude the revenue from the latest acquisition.

The over-the-counter business of the firm may increase 6% on year while the organic international business growth will be a substantial 34%, Kotak Securities said in its preview report. The overall organic revenue may rise 12% on year and decline 5% on quarter, according to the broker.

Motilal Oswal in its preview report said Mankind Pharma's prescription sales are likely to "witness an 11% YoY (year-on-year) growth to INR 25 billion led by strong growth in cardiac/anti-diabetic, new launches in chronic space, and in-licensing opportunities." Exports are seen rising 20% on year by Motilal Oswal on the back of "niche launches and market share gain in the base business." Sequentially, however, the exports growth will "remain flat", according to HDFC Securities.

The profitability of the company in the December quarter will largely track revenue momentum and pricing changes. Kotak Securities estimates a 50 basis points on-quarter decline in gross margin to 71% for Mankind Pharma. The organic business EBITDA may rise 27% on year and fall 10% on quarter to INR 7.7 billion and the EBITDA margin to decline 120 basis points on quarter to 26.4%, Kotak Securities said. At the overall level, "EBITDA may see some one-time impact of acquisition as well as integration costs related to BSV," HDFC Securities said.

The company will detail its Oct-Dec earnings Thursday. Investors will be monitoring the organic business growth and seek an update on the integration of BSV business. At 1522 IST, shares of Mankind Pharma were down 2% at INR 2,513 on the National Stock Exchange.

Following are the Oct-Dec consolidated standalone earnings estimates for Mankind Pharma based on reports from five brokerage firms in descending order of the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Subhojit Sarkar

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