Mankind Pharma Q1 FY27 earnings call

Mankind Pharma reported a robust Q1 FY27, with overall revenue increasing 13% year-on-year to INR 4,031 crores. This growth was significantly supported by a 15.8% increase in the chronic portfolio and a 29% surge in international business revenue to INR 605 crores. EBITDA margin expanded by 250 basis points year-on-year to 26.3%, reaching INR 1,060 crores, reflecting improved operational efficiency and a favorable sales mix. Profit After Tax (PAT) grew significantly by 29.1% year-on-year to INR 574 crores, with PAT margin improving by 170 basis points to 14.2%.

The company's chronic portfolio, excluding BSV, now contributes 40% of its domestic business, an 80 basis point increase year-on-year, with a long-term target of 50% over the next 4-5 years. Key chronic segments like cardiac grew 19.4% and anti-diabetic (excluding tirzepatide) outperformed IPM by 1.1x, with the Glizid family growing 29% year-on-year. This strategic shift is aimed at achieving sustained outperformance against the Indian Pharmaceutical Market (IPM) by leveraging structural levers and strengthening its multi-specialty business.

The acute portfolio demonstrated a strong recovery, growing 10.9% in Q1 FY27, up from 6.1% in Q1 FY26, and is now broadly in line with IPM growth. This recovery was supported by outperformance in gastro (1.2x IPM) and strong growth in gynaecology (12.7% YoY), particularly in the IVF portfolio which grew 39%. The BSV specialty business also showed robust growth of 21% overall, with domestic BSV growing 17% and international BSV growing 25%, contributing to the overall strong performance.

Gross margins for the quarter increased by 230 basis points year-on-year to 72.8%, primarily due to sales price increases and a better sales mix. However, management noted a potential for gross margin compression in the next quarter due to rising commodity prices and dollar strength. Despite this, the company reiterated its full-year gross margin guidance of upward of 71% and an EBITDA margin guidance of 25.5% to 26.5%, indicating confidence in maintaining profitability.

Mankind Pharma reduced its net debt to INR 3,377 crores as of June 30, 2026, resulting in a net debt to adjusted EBITDA ratio of 0.9x. This was aided by the repayment of an NCD tranche of INR 1,250 crores during the quarter. The company remains committed to repaying all acquisition-related debt by FY28, demonstrating a disciplined approach to financial management. Capex for the quarter was INR 198 crores, representing 4.9% of total revenue, which is below the full-year guidance of 6% to 7%.

The company has adopted a strategic approach to new product launches, focusing on therapy-based solutions rather than single molecules, especially in highly competitive segments like GLP-1. While acknowledging the competitive landscape and price wars in GLP-1, Mankind Pharma aims to 'let this storm pass' and focus on complete therapy solutions, having launched GLP-1 products in anti-diabetes and gynaecology segments. This approach is deemed strategic rather than cautious, aiming for sustainable long-term growth.

The Consumer Healthcare business, which generated INR 246 crores in revenue, was partly impacted by the discontinuation of the cash and carry business model, which was affecting general trade. Despite a softer overall market, the company successfully gained market share in key brands such as Manforce, Preganews, and Gas-o-fast. Modern trade and e-commerce channels showed strong growth of 38% and increased their share to 15% from 11% a year ago, indicating a successful pivot in distribution strategy.