Mankind Pharma Receives a Flood Of Buy Calls Following a 57% Increase since its IPO

Mankind Pharma Ltd. has received the most analyst coverage of any new Indian stock in at least 12 years, as investors rush to purchase the drugmaker's shares following a blockbuster IPO in May. Since its initial public offering, the company's stock has increased by 57%, bringing its market value to more than $8 billion. It has already received nine buy recommendations and one hold recommendation. According to data compiled by a news agency, this is the most coverage for an Indian stock that has raised more than $500 million since November 2010.

"It is a domestic pharma firm, grown organically, with solid fundamentals," said Shrikant Akolkar, an analyst at Asian Markets Securities Pvt. "Investors love a good story like that." Despite the fact that the majority of analysts covering the company recommend buying it, the consensus price target is already 10% lower than the current level, despite the stock's stellar performance. The stock is trading at about 53 times trailing 12-month earnings, versus 31 times for India's benchmark pharmaceutical index.

Mankind's stock increased by nearly 32% in its initial public offering. "Everyone was waiting to buy the stock because their valuations during the listing made sense," said Vishal Avinash Manchanda, vice president of institutional research at Systematix Group and the stock's sole hold rating. "However, I believe they are now a little stretched." Because of its popular line of consumer products, Mankind has name recognition among Indian consumers and investors. Akolkar also points out that it is not overly reliant on exports, which protects it from some of the issues that exporting peers face.

US inspectors recently discovered widespread issues at factories run by Indian pharmaceutical companies. Mankind gets 97 per cent of its sales from India, the highest percentage among the nation’s drugmakers of a similar size or larger. About 8 per cent of its domestic sales is from consumer healthcare products, including condoms, for which it has the largest market share in the nation of 1.4 billion people.