Mankind Pharma, India’s fourth-largest pharmaceutical company by domestic sales, has strategically moved forward with its Rs 13,630 crore acquisition of Bharat Serums and Vaccines (BSV). In a bold funding move, the pharma giant has partnered with Kotak Mahindra Capital and IIFL Capital to launch a Qualified Institutional Placement (QIP) worth up to Rs 3,000 crore, according to sources familiar with the development.
Mankind Pharma’s Major Acquisition of Bharat Serums and Vaccines
In July, Mankind Pharma successfully finalized its acquisition of BSV, a company previously owned by private equity firm Advent International. This acquisition is considered one of the largest deals in India’s pharmaceutical sector, reflecting Mankind Pharma’s ambition to strengthen its position in the industry. The purchase is seen as a strategic step that will further enhance Mankind’s market presence, particularly in the critical healthcare segments that BSV operates in.
QIP to Fund Rs 13,630 Crore Acquisition
To support the substantial Rs 13,630 crore acquisition of BSV, Mankind Pharma is preparing to raise funds through multiple channels. One key component of this funding plan is the QIP of up to Rs 3,000 crore. Investment banks Kotak Mahindra Capital and IIFL Capital have been brought on board as advisors for the QIP, which is a crucial element of the overall financing structure for the acquisition.
A source with direct knowledge of the matter revealed that while the QIP is a vital part of the funding strategy, its timeline will depend on several factors, including the completion of the BSV acquisition and prevailing market conditions. “The QIP launch will be determined by the status of the deal closure and other external factors,” the source noted.
Mankind Pharma’s Comprehensive Funding Strategy
Rajeev Juneja, Vice Chairman and Managing Director of Mankind Pharma, shed light on the company’s overall funding plan during a recent interview with CNBC-TV18. He outlined the funding structure for the BSV acquisition, explaining that Rs 4,000 crore will come directly from the company, Rs 3,000 crore will be raised via the QIP, and the remaining Rs 7,000 crore will be sourced through loans. Juneja expressed confidence in the company’s ability to repay the loan within three years.
Market Performance and Strategic Moves
Mankind Pharma has shown remarkable growth in recent months. As of October 8, the company’s market capitalization stood at Rs 1.04 lakh crore, with its share price climbing by an impressive 47.05% over the past year. This performance underscores the confidence investors have in the company’s long-term growth trajectory.
In addition to its acquisition activities, Mankind Pharma has also made strategic moves to streamline its business operations. In early September, the company transferred its Over-the-Counter (OTC) business to its wholly owned subsidiary, Mankind Consumer Products, as part of a slump sale. This restructuring move is aimed at sharpening the company’s focus on its consumer business, which currently contributes 7% of its overall revenue.
Growth Potential of Mankind Pharma’s Consumer Business
The OTC business has emerged as a key revenue driver for Mankind Pharma. In Q1 FY25, the OTC segment generated Rs 206 crore in revenue, with a healthy EBITDA margin of 19.5%. For the full FY24, the segment posted total revenues of Rs 706 crore, maintaining an EBITDA margin of 19.9%. These figures highlight the growing importance of the OTC business in Mankind Pharma’s overall strategy, as the company looks to expand its consumer-facing product portfolio.
Analysts’ Positive Outlook on Mankind Pharma
Market analysts are bullish on Mankind Pharma’s stock performance, particularly in light of the BSV acquisition. Last month, brokerage firm Investec initiated coverage on Mankind Pharma with a ‘buy’ rating, citing the long-term growth potential of BSV’s specialty business. Investec believes that the market may be undervaluing the strategic significance of BSV’s business, which will likely play a crucial role in Mankind Pharma’s future growth.
Conclusion: Mankind Pharma Poised for Growth
Mankind Pharma’s acquisition of Bharat Serums and Vaccines marks a significant milestone in the company’s growth strategy. By securing funding through the QIP and other financial channels, the company is positioning itself to capitalize on new opportunities in the pharmaceutical sector. With strong market performance, strategic business moves, and positive analyst sentiment, Mankind Pharma is well on its way to becoming a dominant force in both the domestic and international markets.
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