Windlas Biotech off to a weak start, lists at 5% discount to issue price

The stock listed at Rs 437, 5 per cent below its issue price of Rs 460 on the NSE

Shares of Windlas Biotech (WBL) made a disappointing debut on Monday, as the shares of the company listed at Rs 437, 5 per cent below its issue price of Rs 460 on the National Stock Exchange (NSE). The stock of the pharmaceuticals company, meanwhile, opened at Rs 439 on the BSE.

At 10:19, WBL was trading at Rs 431, down 6 per cent against the issue price on the NSE. The stock hit a high of Rs 452 and a low of Rs 405 so far in trade. A combined 1.9 million equity shares have changed hands on the counter on the NSE and BSE.

The initial public offer (IPO) of WBL got a decent response from the investors as the issue got subscribed 22.44 times. The qualified institutional buyers (QIBs) portion was subscribed 24.4 times, the non-institutional investors (NII) or wealthy investor portion 15.73 times, and the retail portion 24.22 times.

The object of the issue was to purchase equipment required for the capacity expansion of its existing facility at Dehradun Plant IV. The company will net proceeds of the issue to finance incremental working capital requirements of the company and to repayment/prepayment of the company's borrowings.

WBL is a leading Contract Development Manufacturing Organisation (CDMO) with a focus on the chronic therapeutic category. With more than two decades of experience in manufacturing both solid and liquid pharmaceutical dosage forms, WBL provides a comprehensive range of CDMO services including product discovery, product development, licensing and commercial manufacturing of generic products.

The company’s innovative portfolio of complex generic products supported by robust R&D capabilities, efficient and quality compliant manufacturing facilities with significant entry barriers, long-term relationships with Indian pharmaceutical companies and a consistent track record of financial performance provides for further growth visibility. On the valuation front, at the upper price band, the issue is aggressively priced at 64.4x P/E considering the diluted equity shares and FY21 annualised earnings, brokerage firm BP Equities said in IPO note.

WBL is focusing on formulation CDMO and there is no peer company focusing solely on the CDMO model. "At the higher price band of Rs 460, considering its return ratios and profitability, the issue seems to be fully priced. But factoring in the growth drivers of the CDMO sector and opportunities available for the company, we assign a “Subscribe for Long Term” rating for the issue," Choice Equity Broking said in the IPO update.