Rationale

 The rating assigned to Mankind Pharma Limited (MPL) factors in its established presence in the domestic formulations market as the fourth largest player with a market share of 4.4% and for consistently ranking as number one by the volume of prescriptions over the last seven years 1 . It also ranks third in the domestic formulations market in terms of sales volume2 . Further, MPL has a well-diversified presence of established brands across therapies and a healthy portfolio of consumer healthcare brands. Moreover, the company has a strong manufacturing setup across India, accredited by regulatory authorities of various countries, including the US FDA3 . MPL’s operating income has grown at a compounded annual growth rate (CAGR) of 15.7% between FY2019 and FY2024, and its operating profit margins (OPM) have also remained healthy at 22.4% and 24.5% in FY2023 and FY2024, respectively. The ratings also factor in the company’s strong financial profile characterised by healthy capitalisation and coverage indicators and a strong liquidity position being net cash surplus over several years. The ratings also take into account its limited presence in export formulations, susceptibility of its profitability to competitive pressures and volatility in raw material prices, and exposure to regulatory risks, including price regulations and increasing focus towards trade generics in the domestic formulations market. However, its limited exposure to regulated markets also reduced the risks of any adverse impact on account of greater scrutiny/ observations by regulatory agencies like the US FDA. ICRA also notes that the company is open to growing inorganically through acquisitions; and the impact of such events, if any, shall be analysed on a case-to-case basis. The Stable outlook on the long-term rating reflects ICRA’s opinion that MPL will maintain its healthy credit profile, supported by steady revenue growth and strong cashflow generation, aided by its established business position in the domestic formulations market.