Price Band, GMP, Future Prospect, Listing, Should You Subscribe?

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Windlas Biotech Limited is going public with its initial public offering (IPO) on August 4 and it will close its subscription on August 6. Any anchor bookings that might take place would happen on August 3, before the opening day. The grey market premium (GMP) for the Windlas Biotech IPO was listed as Rs 150 on August 3, as per IPO Watch. Stacked against the price band of Rs 448 to Rs 460 per equity share, it indicated that the shares were trading at a premium of Rs 598 to Rs 610 on the unlisted grey market.

The investors of the IPO were allotted reservations for the upcoming issue. The qualified institutional buyers (QIBs) were given an allotment of 50 per cent. The non-institutional investors have a listed reservation of 15 per cent for the issue. The Retail investor segment was reserved a 35 per cent allotment. The IPO has a minimum lot size of 30 shares with Rs 13,800 as the benchmark application amount. The higher end of the lot stands at 420 shares with Rs 193,200 shares as the application amount. The retail investors can apply for up to 14 lots at the upper maximum.

The allotted shares for anchor investors were set at 26,18,707 shares with a value of Rs 120.46 crore. The Rs 401.54 crore IPO is made up of a fresh issue of Rs 165 crore and an offer for sale (OFS) worth Rs 236.54 crore with 5,142,067 equity shares at Rs 5 per share as the face value.

Windlas Biotech plans to use the proceeds of the IPO to fund the purchase of equipment required for capacity expansion of its existing facility at Dehradun Plant IV. A portion of the funds will also go towards financing incremental working capital requirements of the company. The remainder of the funds will go towards repayment/prepayment of the company’s borrowings as well as general corporate purposes.

Speaking on the outlook of the public issue, Sandeep Matta, Founder of TradeIT Investment Advisory said, “One of the top five formulation of CDMO companies in India services from product discovery to product development, licensing, and commercial manufacturing of generic products including complex generics and supplying to marquee pharma clients such as Pfizer, Sanofi, Cadila, Emcure, Eris etc. Company is looking to raise 401 Cr via IPO route however on the financial parameters the issues is aggressively prices at PE of 64 while the current valuation has also discounted all near term positives for the company. Investors with surplus cash reserve can apply purely for the long term.”

The Windlas BiotechIPO is one of four major public issues making their debut this week and is highly anticipated. The company’s public issues is attractive for a few reasons. One is that the company has a diverse product portfolio. Windlas Biotech also has a strong and established international presence with robust exports being one of the company’s key highlights. This has aided in the company being able to diversify its geography and revenue. The production capacity is another noteworthy factor in the company’s strengths as it maintains a high production capacity of its CDMO offerings, which gives it an edge over the competition, according to Angel Broking.

Established in 2001, the company specialises in the manufacture of pharmaceutical formulations contract development and manufacturing organizations (CDMO). In this line, it offers a wide range of services as well. These services range from discovery to product development, licensing, and commercial manufacturing of generic products.

The revenue from the domestic market stood at Rs 4,07.72 crore which is approximately 95.5 per cent of total revenue. The rest came from overseas markets as per a report by Bloomberg Quint. The company spent Rs 3.61 crore on research and development. This is about 0.93 per cent of the total expenses as per the report. The company’s top five customers accounted for 57.9 per cent of its total revenue. The biggest client contributed around 11 per cent of that, according to Bloomberg Quint.

Should You Subscribe to the Windlas Biotech IPO?

Windlas Biotech is amongst the top five domestic pharmaceutical formulations CDMO companies in the country. It has three strong business verticals which include CDMO Products and Services, Domestic Trade Generics and Over-the-counter (OTC) market, and Export, according to Angel Broking. The clientele of the company is of a reputed standing with names such as Intas Pharmaceuticals, Sanofi India, Pfizer, and Cadila Healthcare to name a few. The exports of the company bring in a significant portion of the revenue.

“Besides being a domestic leader in the CDMO segment, Windlas Biotech boasts an innovative product portfolio comprising complex generic products. Also, its team of experienced and proficient managers and promoters continue to act as its moat. Moreover, its impressive earnings make for sustained growth and revenue generation,” said Angel Broking in a note

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