Mankind Pharma is undergoing several transformations in the past one-and-a-half years. The company has made a sizeable acquisition of BSV Pharma which, despite being well integrated and on a growth path, is yet to deliver revenue synergies as was expected from the premium acquisition. In the same period, the company has launched an internal reorganisation that has marginally diminished its high growth prospects. 

We earlier recommended investors accumulate the stock tracking the debt repayments, synergies, equity dilution and earnings growth. The stock has delivered peak returns of 38 per cent since the call, but has since given up the gains. We now recommend investors hold the stock. The acquisition synergies and return of high growth post reorganisation must be monitored even as a jump in earnings is likely, as the acquisition debt will be further repaid in the next two-three years.

Base business

Mankind’s organic business includes domestic prescription (83 per cent of FY25 revenues), consumer health brands (7 per cent) and exports (9.7 per cent).

The domestic prescription segment is estimated to have grown at 8-9 per cent year on year in FY25 going by organic growth reported for segments. The company reported 13.5 per cent growth in the segment in FY24, driven by a strong sales force and deep penetration into metro and tier-II to -VI cities. The slowdown to 1.1 times IPM (Indian Pharma Market) growth in FY25 compared to 1.5-1.7 times IPM growth earlier is on account of the internal reorganisation of the sales force. The company has completed the exercise of optimising, replacing, training and hiring managerial talent in the sales force in the last one year. This new sales force is expected to return to the earlier high growth phase with time, as the interaction with doctors and hospitals normalises. The result seems to be on an extended timeline though, with H1FY26 performance only marginally outpacing IPM growth.

The other two segments have fared better despite smaller contributions. The consumer health segment consisting of strong brands such as Gas-OFast, Manforce, HealthOK and Preganews have delivered strong 15 per cent year-on-year growth in FY25, with only the recent GST rationalisation impacting the performance. The company had reorganised the consumer health division prior to the current company-wide reorganisation which had yielded strong results, but without a lag. The export segment building a portfolio in the US and Europe should deliver strong growth on a small base.

Acquisition score card

BSV Pharma reported FY24 revenue of ₹1,723 crore and is estimated to have delivered 15 per cent growth to ₹1,974 crore revenues in the last 12 months (based on organic growth reported), implying sales growth post-acquisition. The acquired portfolio consisted of domestic and international segments, with international reporting faster growth. The domestic segment is undergoing integration of manufacturing and distribution on an optimised manpower base. The company expects to deliver 18-20 per cent growth in FY26 for the acquired portfolio with EBITDA margins in line with the company range of 25-26 per cent.

The acquisition at a premium multiple of 27 times EV/EBITDA last year was expected to be EPS-dilutive in the initial years. The finance cost and depreciation and amortisation costs have increased from ₹220 crore in H1FY25 to ₹780 crore in H1FY26. The cash EPS (profit before tax plus depreciation net of effective tax rate) adjusting for depreciation and amortisation has delivered a modest growth of 13 per cent in FY25.

The company expects to clear acquisition-related debt (net debt of ₹4,791 crore on September 2025) by FY28, which should deliver savings on interest cost.

But the premium acquisition was expected to deliver cost synergies (which have been realised) and, more importantly, revenue synergies. BSV portfolio is a high entry-barrier portfolio in reproductive and women’s health. It was expected that Mankind base sales force and BSV’s access to specialised professional would deliver cross-synergies with each portfolio growing faster. But owing to internal reorganisation at the same time, the revenue synergies may not have been fully realised. The company is establishing an additional manufacturing unit and an R&D lab for BSV division, which should accelerate the process.

The EPS growth (on a cash basis) further supported by debt reduction should support earnings growth for the company. But the company trading at xx times one-year forward despite 24 per cent decline last year should be further supported by acquisition synergies and reorganised sales force, which has delivered only partially. We recommend investors hold the stock tracking the company performance on the two metrics.

Published on January 3, 2026