India's top pregnancy test kit maker Mankind eyes biggest IPO so far this year

Rama Venkat
Updated ·2 min read
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FILE PHOTO: The Bombay Stock Exchange (BSE) logo is seen at the BSE building in Mumbai

By Rama Venkat

BENGALURU (Reuters) -Indian pharmaceutical company Mankind Pharma Ltd is seeking a valuation of 432.64 billion rupees ($5.27 billion) at the upper end of a price band it set for its initial public offering (IPO) on Wednesday, making it the largest domestic stock launch so far this year.

The company, which makes at-home pregnancy testing kit Prega News which have an 80% market share in the country, as well as Manforce condoms, set the price band at 1,026 rupees to 1,080 rupees per share.

The IPO for the company will consist of nearly 40.1 million shares on an offer for sale from existing shareholders, according to a prospectus, implying the proceeds would go to the selling shareholders alone. The offer size is of 43.26 billion rupees.

"The ask valuation is a bit expensive at the industry average of earnings before interest, taxes, depreciation, and amortization, or EBITDA multiples of what Indian pharma companies are trading at," said Prashanth Tapse, research analyst at Mehta Equities, comparing it to firms like Cipla Ltd and Zydus Lifesciences Ltd.

Tapse said Mankind was commanding an EBITDA ask valuation of 19-20 times, while on an industry average, pharma companies are trading at 15-16 times EBITDA.

Mankind Pharma's IPO comes at a time when volatile markets and global macroeconomic challenges have scuppered or delayed various listing plans in India.

Earlier this year, personal care products startup Mamaearth put its IPO on hold while apparel retailer Fabindia and jeweller Joyalukkas withdrew their plans.

Mankind, which also makes acute and chronic therapeutics, posted a profit of 9.96 billion rupees for the nine months ended Dec. 31, down from 12.43 billion rupees a year ago, while its revenue from operations for the same period rose nearly 11%.

The company had filed draft papers for the IPO in September last year, with Kotak Mahindra Capital, Axis Capital and J.P. Morgan India among the book running lead managers.

The bidding date for anchor investors is set for April 24, while retail investors can make an offer from April 25 to April 27.

Mankind, India's fourth-largest pharma company in terms of domestic sales, is set to start trading on May 9.

($1 = 82.1170 Indian rupees)

(Reporting by Rama Venkat in Bengaluru; Editing by Nivedita Bhattacharjee)