According to dealers, shares of the drugmaker were commanding a premium of Rs 100-113 to its issue price of Rs 1,080 in the grey market.
“We expect the issue to open 8-10% higher on the listing day,” said Prathamesh Masdekar, research analyst, Stoxbox.
Considering the expensive valuations of the stock versus peers, Masdekar advises investors who were allotted in the IPO to book profits on the listing day.
The Rs 4,326 crore IPO of Mankind Pharma, which was completely an offer for sale (OFS), received overwhelming response, as the issue was subscribed a whopping 15.32 times. This was primarily driven by the strong interest from qualified institutional investors.
The IPO of Mankind Pharma is the largest so far this year and one of the largest ever by a domestic drug maker since Gland Pharma came up with its Rs 6,480 crore public issue.
The QIB portion was subscribed 49 times, and the portion for high networth individuals was subscribed 3.8 times. However, retail investors didn’t show much interest in the IPO.
At Rs 1,080 a share, Mankind Pharma is valued at a price-to-earnings of 30 times its FY22 earnings and commands a market capitalisation of Rs 44,000 crore. Post-IPO, the promoter will hold 78% of the company, with 12% held by existing private equity investors.
Mankind Pharma is the fourth-largest Indian pharmaceutical company in terms of domestic sales and the third-largest in terms of sales volume.
It has a pan-India marketing presence and operates 25 manufacturing facilities across the country. As of December 2022, the company had a team of over 600 scientists and a dedicated in-house R&D centre with four units located at IMT Manesar, Gurugram and Thane.
“Though fundamentals of the company look good from a long-term perspective, including the domestic focus of the business, strong distribution network and good products at affordable prices, we would be comfortable for fresh entry at lower levels,” Masdekar said.
He believes at the current juncture, there are better opportunities in the pharmaceutical space, which are trading at lower multiples compared to the long-term averages.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
