Thread by @tushar9590

#Windlas BioTech
We all have heard abt CDMO being a super theme, but majorly on international markets side.

Here I'll discuss a Co which is the one of Top 5 Domestic CDMO player, & the only listed player on Indian Bourses.

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🧵🧵
(1/N)

Co is in the Top 5 Domestic Formulations CDMO in terms of Revenue.
Co operates in 3 verticals:
CDMO
Trade Generics &
Exports
(2/N)

While CDMO space is the one, where co focuses on products across pharmaceutical & nutraceutical segment.
Co mainly focuses on Chronic, SubChronic & Acute therapies.
Co provides CDMO services to 7 of the Top 10 (15
of top 20) Indian Pharma Formulations
Cos in FY22
(3/N)

Trade Generics include Nutraceutical
& Health Supplement products, which
Patents have been expired and are
typically used as a substitute to
branded expensive Generic medicines. This is one sector where govt is paying huge attention as a goal to make meds to the masses.
(4/N)

In the Exports segment, co is focused on exporting in semi regulated international markets, providing products to pharma cos, as well pharmacies in those markets.
(5/N)

Let's see the revenue contribution from all these verticles.
As you can see, co major revenue comes from CDMO, which has come down from 85 pct in FY21 to 81 pct in FY22, Trade Generics contribute around 13 pct, & Exports around 4 pct.
(6/N)

Let's see how many customers the co caters to in the CDMO space, & how the no has grown over the years.

In past 3 yrs, Co has added CDMO customers at a CAGR of 43 pct, while top 10 customers contribute to 51.9 pct, which has come down from 57 pct in 2019.
(7/N)

Other than these 3 verticals, Co has an injectable unit coming up, which is a high margin business, which is still undergoing civil works, & likely to start commercializing their 1st batch somewhere around FY24.
Co has been doing a capex of around 70 crore for the same
(8/N)

Talking about their facility standards & quality checks, Co operates in semi regulated markets, all recent inspections by various agencies got cleared with zero observations.
Recent EU inspection opens door for more growth opportunities for the co
(9/N)

Let's look at the growth outlook for the co, in all its verticals & the guidance given by the co

Co aims to double the CDMO business, grow our trade generics 3x and grow exports vertical by 4x by FY26.
(10/N)

This growth will translate to approximately
17% CAGR over the next five years at the company level.

However from the yesterday earnings call, Co is confident to surpass Trade generics biz targets, given the strong traction co is seeing, due to govt focus in this space.
(11/N)

Talking about the margins, Co Ebitda margins are close to 12 pct, which will continue to improve as supply chain issues get resolved.
Key thing to note here, Co injectible unit when started & fully utilized, margins for them would be in 18-19 pct range
(12/N)

& Revenues from their Injectable would be in range of 100-120 crore, plus as operating leverage kicks in with increasing utilization, margins will grow further over the years.
(13/N)

Now the surprising part is Valuations, if we see the Mcap of the co is 490 crores, while Co is holding cash of 180 crores on its books.
So Co is looking at inorganic opportunity to expand their biz even further.

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