If one IPO has to be talked about that has severely disappointed investors after its listing in August last year is Windlas Biotech Limited (NS:). After the issue price of INR 460, the stock marked its debut at a discount, at INR 437, and never touched the high of the issue price. But Worst, the stock kept on plunging and marked an all-time low of INR 203.25. That’s a value erosion of more than 50% from the issue price.
But now it seems like the tide is turning for the stock. First of all, talking about the business, the company provides contract manufacturing services for the pharmaceutical industry and also focuses on product development and manufacturing capabilities in generic products. It has a market capitalization of a mere INR 489 crores. On the financial front, FY22 has been the best year in terms of revenue as the company clocked a record INR 472.64 crores of revenue, while net profit soared 140.7% to INR 38.09 crores in the same period.
Image Description: Daily chart of Windlas Biotech with volume bars at the bottom
Image Source: Investing.com
The stock is trading at a P/E ratio of 12.86, compared to the industry’s average of 34.38, making it one of the best options for high-risk value-seekers. The company also pays dividends to shareholders and the stock trades at a dividend yield of 0.46%.
After falling for a very long time, the stock changed its course from a downtrend to a sideways trend which is an early signal of a complete trend reversal. In fact, a stock that gradually changes its trend from a downtrend to a neutral and then to a positive one generally delivers a more sustainable rally than a stock that abruptly changes the trend with a V-shaped bottom.
Finally, the stock seems to be making a shift from a sideways trend to an uptrend. Today’s 5.94% rally to INR 238.1 has breached the upper resistance level of the range, i.e. INR 230 – INR 233. Closing above this resistance has even strengthened the positive view on the stock. The volume for the day was recorded at around 278.2K shares which is the highest one-day volume in around 4.5 months.
Today’s breakout might lead the stock to the nearest level of INR 280 in the coming weeks. Even if it takes more time, the prior downtrend which eroded more than 50% of investors’ wealth seems to be over now.
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