Mankind Pharma IPO GMP (Grey Market Premium)

Mankind Pharma IPO worth Rs. 4,326.36 crore, comprises entirely of an offer for sale of the said amount. There is no fresh issue component in this IPO. The offer for sale (OFS) component is by the promoters and early shareholders of the company. Here it must be noted that while the fresh issue component infuses fresh funds into the company, it also is EPS dilutive and equity dilutive. On the other hand, the OFS is just a transfer of ownership so there is no fresh infusion of funds, but it also does not dilute the equity. The IPO of Mankind Pharma is priced in the band of Rs.1,026 to Rs.1,080 per share and the IPO allotment price will be discovered post the book building process. At the upper end of the price band of Rs1,080, the size of the issue of 4,00,58,844 shares would be worth Rs4,326.36 crore.

The selling shareholders in the OFS of Mankind Pharma would be the promoter group as well as some of the early private equity and other institutional investors as under.

The issue of Mankind Pharma opens for subscription on 25th April 2023 and closes for subscription on 27th April 2023 (both days inclusive). The basis of allotment will be finalized on 03rd May 2023 and the refunds will be initiated on 04th May 2023. In addition, the demat credits are expected to happen on 05th May 2023 and the stock is scheduled to list on 08th May 2023 on the NSE and the BSE.

Mankind Pharma IPO GMP

The grey market price (GMP) trading normally starts about 4-5 days prior to IPO opening and continues till the listing date. In the case of Mankind Pharma Ltd, we already have GMP data for the last 5 days, which should give a reasonable post-listing picture. There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, which includes the levels of the Nifty and Sensex as well as the general IPO market and macro conditions. Secondly, the extent of subscription for the IPO across the retail and the QIB segments also has a deep impact on the GMP as it is indicative of investor enthusiasm.

There is one small point to remember here. The GMP is not an official price point, just a popular informal price point. However, in most cases, it has been observed to be a good informal gauge of demand and supply for the IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance of the stock would be.

GMP tends to be a good mirror of the real stock story. More than the actual price, it is the GMP trend over time that gives insights about which direction the wind is blowing. Here is a quick GMP summary for Mankind Pharma IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 82, but the latest GMP has improved by Rs. 121 per share. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 25th April 2023, as that would have a very significant impact on the GMP. In the past, stocks which got oversubscribed in the IPO also saw a very robust positive shift in the grey market pricing. For a start, Mankind Pharma Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of Mankind Pharma Ltd at Rs.1,080 as the indicative price, then the likely listing price is being signalled at around Rs.1,160 per share as of the GMP indicator on 19th April 2023. One data point to track will be the subscription update on the stock as that would chart the GMP course from here. As mentioned, the institutional QIB subscription is a key trigger for the GMP pricing.

The GMP of Rs.80 on a likely upper band pricing of Rs.1,080 indicates a listing premium of a healthy 7.41% for Mankind Pharma Ltd over the listing price. That pre-supposes a listing price of approximately Rs.1,160 per share, when Mankind Pharma Ltd lists on 09th May 2023. These are approximations, so you must keep a margin of safety. However, that would depend on the GMP sustaining over the next few days after the issue opens.

GMP (grey market price) is an important indicator, albeit informal, of likely listing price. One cannot take this price at face value However, the GMP tends to be quite dynamic and changes direction with the flow of news and events. Investors must note here that this is just an informal indication and has no official acceptance. The best thing one can do with the GMP is to observe the trend closely as that gives the best hints on listing status. Focus on the time series trend than on numbers.

Read What you must know about the Mankind Pharma IPO

Mankind Pharma Ltd was incorporated in 1991. It develops and manufactures a complete of range of pharmaceutical formulations to treat acute and chronic therapeutic areas. In addition, it is also extremely popular in India for its consumer healthcare products, especially those sold under the Manforce brand and the Prega News brand. Its formulations portfolio includes anti-infectives, cardiovascular, gastrointestinal, anti-diabetic and respiratory related products.

Mankind Pharma is predominantly an India driven business with 97% of revenues coming from the domestic market. The company has annual revenues of over Rs7,700 crore and employs more than 22,000 employees, including more than 600 scientists at its R&D centre. Mankind Pharma has also applied for 54 ANDAs. The issue will be managed by Kotak Mahindra Capital Company, Axis Capital, IIFL Securities, Jefferies India, and JP Morgan India. KFIN Technologies will be the registrar to the issue