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The initial public offer of Windlas Biotech, pharmaceutical formulations manufacturer, was fully subscribed on Wednesday, the first day of the bidding process. The three-day public offer will conclude on August 6. The company has fixed a price band of Rs 448-460 a share. At the upper end of the price band, the initial share sale will raise Rs 401.53 crore.
The company on Tuesday said it has raised over Rs 120 crore from anchor investors ahead of its IPO that opens on Wednesday. Windlas Biotech has decided to allocate 26,18,706 equity shares at Rs 460 apiece to 22 funds aggregating to Rs 120.46 crore.
The public offer has received bids for 65,61,960 shares so far till 11.55 pm (IST) against 61,36,252 shares offered by the company. The retail quota subscribed by more than 3 times so far, data available with exchanges showed.
Among the anchor investors who participated in the bidding are ICICI Prudential Mutual Fund (MF), UTI MF, Sundaram MF, Kuber India Fund, BNP Paribas Arbitrage, Elara India Opportunities Fund and Canara HSBC Oriental Bank of Commerce Life Insurance Company.
The proceeds from the IPO will be utilised for purchasing of equipment required for capacity expansion of the facility at Dehradun Plant-IV and addition of injectables dosage capability at the facility at Dehradun Plant-II. It will also be used for funding incremental working capital requirements, repayment/ prepayment of certain of borrowings and general corporate purposes.
Half of the issue size has been reserved for Qualified Institutional Buyers (QIBs), 35% for retail investors and the remaining 15% for non-institutional investors.
Should you subscribe Windlas IPO?
Marwadi Shares and Finance: Subscribe
Considering the FY21 adjusted earnings per share (EPS) of Rs 7.14 on the post-issue basis, the company is going to list at a P/E of 64.39 with a market cap of Rs 1002.5 crore. There are no listed companies in India that engage in a business similar to that of the company. Hence, it is not possible to provide an industry comparison in relation to the company. Marwadi Shares and Finance assigns the “Subscribe” rating to this IPO as the company is one of the leading contract development and manufacturing organisation (CDMO) players with an innovative portfolio of complex generic products supported by robust research and development capabilities and has quality compliant manufacturing facilities with significant entry barriers.
Sharekhan: Strong growth prospects
At the IPO price band of Rs 448-460, the offer is priced at 52.4x / 53.8x its FY2021 reported EPS (at its lower / upper price band). The domestic formulations CDMO industry is projected to grow at a CAGR of around 14% over FY2020 to FY2025. Windlas is among the few players with a wide range of CDMO offering in the formulations segment in India with experience in providing customer-centric additive manufacturing solutions. Windlas is well placed to capture this growth opportunity and expand its customer base. The foray in the injectables space will complement its existing CDMO offerings and enable to achieve higher margins while the business to business model also allows an opportunity for scaling up operations. Thus, the growth prospects for the Windlas are strong.