WINDLAS BIOTECH IPO

IPO Details:

Price Band: 448-460

Cutoff Price: 460

About Company:

Windlas is one of the top five players in the domestic pharmaceutical formulations contract development and manufacturing organization (“CDMO”) industry in India in terms of revenue. With over two decades of experience in manufacturing both solid and liquid pharmaceutical dosage forms and significant experience in providing specialized capabilities, including, high potency, controlled substances and low-solubility, company provide a comprehensive range of CDMO services ranging from product discovery, product development, licensing and commercial manufacturing of generic products, including complex generics, in compliance with current Good Manufacturing Practices (“GMP”) with a focus on improved safety, efficacy and cost. In Fiscal 2020, the company's market share was approximately 1.5% in terms of revenue in the domestic formulations CDMO industry. In addition to providing services and products in the CDMO market, Windlas also sells their own branded products in the trade generics and OTC markets, as well as export generic products to several countries.

Competitive Strengths:

1. CDMO player with focus on the chronic therapeutic category.

2. Innovative portfolio of complex generic products supported by robust R&D capabilities.

3. Efficient and quality compliant manufacturing facilities with significant entry barriers.

4. Long-term relationships with Indian pharmaceutical companies.

5. Consistent track record of financial performance.

6. Experienced Promoters and senior management with a professional and technically qualified team.

Strategies:

1. Capitalize on expansion opportunities by leveraging leadership position in the CDMO industry.

2. Continue to grow CDMO customer base.

3. Expand product portfolio and delivery systems by enhancing R&D and manufacturing capabilities.

4. Focus on the Domestic Trade Generics and OTC Brands SBV and high growth export markets by capitalizing on industry opportunities.

5. Foray into high growth injectables segment.

6. Selectively pursue strategic investments and acquisitions.

Financial Performance:

Company revenue, net profit and EPS are positive. Revenue is increasing but Net Profit and EPS are decreasing year on year, With EPS of 8.7, company cutoff price is at P/E of 52.9.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Offer for Sale

2. Purchase of equipment required for capacity expansion and addition of injectable dosage capability

3. Funding working capital requirement

4. Repayment/Prepayment of borrowings

Competitors Comparison:

Windlas Biotech seems to be undervalued based on the P/B ratio but it is overvalued based on the P/E ratio.

Grey Market Premium:

Our view: GMP of the IPO is decent and also the price is fairly valued after comparing it with listed competitors. We can expect this IPO to list at premium and hence I would be applying for this IPO for listing gains.

Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

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