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Below is quote on Windlas Biotech Limited IPO Report by Mr. Yash Gupta, Equity Research Associate, Angel Broking Ltd   

Windlas Biotech Ltd. The company was incorporated in 2001 based in Dehradun. The Company operating with 3 business verticals - 1. CDMO Products and services, 2. Domestic trade generics and Over-the-counter (OTC) market 3. Exports. The company currently owns and operates four manufacturing facilities located at Dehradun in Uttarakhand. As of March 31, 2021, their manufacturing facilities had an aggregate installed operating capacity of 7,063.83 million tablets/capsules, 54.46 million pouch/ sachet and 61.08 million liquid bottles.

Positives: (a) Leading CDMO in India with a focus on the chronic therapeutic category. (b) Promoter having experience of over two decades in manufacturing both solid, liquid, and CDMO business along with a good regulatory compliance track record. (c) Innovative portfolio of complex generic products supported by robust R&D capabilities. (d)Provides CDMO services to 7 of the top-10 Indian Pharmaceutical formulations companies. Clients like – Pfizer, Sanofi, Cadila, etc.

Investment concerns: (a) High dependency on CDMO business, 85% of FY2021 revenues. Any slow down in CDMO business can hurt the company’s growth outlook. (b)Companies top-10 customers contributed 58% of revenue, company highly dependent on them. (c)Working capital days have increased from 13 days in FY2020 to 70 days in FY2021.

Outlook & Valuation: Based on FY-2021 adjusted earnings, IPO is priced at PE of 22.2x and EV/EBITDA of 15.58x at the upper band of the IPO price, which is slightly better than the peer’s companies. The Company has a very healthy balance sheet with negative Net Debt/ Equity. Quality CDMO business has huge potential in India in the near future and the company having a good regulatory compliance track record. We expect the upcoming expansion plan in Dehradun and increase in capacity utilization will be the next growth drivers for the company. We are assigning a “SUBSCRIBE” recommendation to the issue.

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