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On Monday, JPMorgan maintained its Overweight rating on Mankind Pharma Ltd (MANKIND:IN) and increased the price target from INR3,000.00 to INR3,150.00. The adjustment follows the company's third-quarter financial results, which aligned with the Street and JPMorgan estimates (JPMe) in terms of revenue. However, Mankind Pharma's adjusted EBITDA margins of 27.6% exceeded expectations, showing a 430 basis points year-over-year increase and surpassing consensus and JPMe by 130 and 260 basis points, respectively.
Mankind Pharma reported an organic revenue growth of 11% year-over-year, with specific segments experiencing varied growth rates. The domestic pharmaceuticals, consumer health, and exports sectors grew by 7%, 30%, and 43% year-over-year, respectively. The domestic pharmaceutical growth was slightly below the Indian Pharmaceutical (TADAWUL:2070) Market (IPM) growth of 7.4% year-over-year. This was attributed to ongoing efforts to enhance field force efficiency, which is about 70-80% complete, and regulatory action on certain products.
Management at Mankind Pharma anticipates a rebound in growth from the fiscal year 2026 onwards. The integration of the BSV portfolio is in progress, which has somewhat affected revenue growth forecasts for FY25, with expectations set at a flat rate. Nonetheless, the company is confident in achieving robust mid-teens growth starting FY26, with an improvement in margins to 30% over the next two to three years, up from the current approximate 26%.
The net debt to EBITDA ratio stood at 2.2 times as of the third quarter and is projected to decrease to 2 times by the end of FY25. Despite domestic pharmaceutical growth being lower than anticipated for the first nine months of FY25, the company's margins have surpassed projections. JPMorgan analysts have expressed a positive outlook on Mankind's domestic franchise, noting its rapid growth, increasing chronic care market share, and healthy margins.
JPMorgan has revised its EBITDA estimates for FY25, FY26, and FY27 by 0%, -3%, and -5% respectively, to reflect the moderated growth expectations in India. The new price target of INR3,150 is based on rolling forward to March 2026 valuations from September 2025, applying a 28x EV/EBITDA multiple. The Overweight rating has been reiterated in light of these developments.
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