Hindustan Laboratories Limited IPO

01At a glance

What the company does: manufactures generic formulations, off-patent medicines, at a WHO-GMP-certified plant in Palghar, Maharashtra, and supplies them under procurement contracts, mostly to government bodies (DRHP p.24, DRHP p.196).

Who pays it: central and state government agencies were 89.93% of revenue in the six months to September 2025, state agencies alone 71.82% (DRHP p.37). The largest customer was 20.90% of revenue and the top ten 65.43% (DRHP p.38). It supplied 27 states and union territories (DRHP p.24).

Why it is raising money: ₹725.00 million for working capital, and the rest for general purposes (DRHP p.25).

How fast it has grown: revenue from ₹1,723 million in FY23 to ₹2,197 million in FY25, and ₹1,126 million in the six months to September 2025 (DRHP p.27).

The one thing to understand: a tender supplier whose customers pay slowly. Debtor days rose from 92 in FY24 to 124 in the six months, net working capital days from 52 in FY23 to 133, and operating cash flow fell from ₹332.85 million in FY23 to ₹107.67 million in FY25 while profit rose (DRHP p.119, DRHP p.351).

02The business, in plain words

A generic-drug maker bids in government tenders to supply specified medicines in bulk at quoted prices, manufactures them to the specification, delivers to state warehouses or hospitals, and waits for payment.

A state medical-services corporation tenders for a year's supply of an antibiotic → Hindustan Laboratories quotes and wins → it makes the tablets at Palghar and delivers to the state's drug warehouses → the state pays on its own schedule.

Private customers have grown from 0.21% of revenue in FY23 to 10.07% in the six months (DRHP p.37).

Earnings equation: Profit ≈ units supplied × (tender price − materials and conversion cost) − interest. EBITDA margin was 22.60% in the six months (DRHP p.119).

03Where the money comes from

Source: DRHP p.37. H1 FY26 is six months.

Source: DRHP p.38.

04The growth record

Source: DRHP p.27, DRHP p.119, DRHP p.351. H1 FY26 is six months.

Our arithmetic: revenue grew about 12.9% a year from FY23 to FY25 and profit after tax about 36.2% a year (our arithmetic, DRHP p.119). The offer document puts return on capital employed at 31.76% in FY23, 37.25% in FY24 and 33.13% in FY25, and net working capital at 52, 78 and 115 days (DRHP p.119).

05What the growth is made of

Higher margins more than volume: revenue grew 28% from FY23 to FY25 while EBITDA grew 76% (our arithmetic, DRHP p.119). Private-sector sales, from near zero, reached ₹201 million in FY25 (DRHP p.37).

06Earnings quality

Profit is running ahead of cash. Over FY24 to September 2025 the company booked ₹936 million of profit and generated ₹375 million from operations (our arithmetic, DRHP p.27, DRHP p.351). In the six months it charged ₹49.92 million for expected credit losses and bad debts (DRHP p.351). The auditors expressed no reservations, qualifications, emphasis of matter or adverse remarks; there are CARO comments that needed no adjustment (DRHP p.27).

07The balance sheet

Source: DRHP p.27, DRHP p.119.

Borrowings are small; the working-capital need shows up in receivables, not debt (DRHP p.27, DRHP p.119).

08What the money is for

Source: DRHP p.25.

09Who is selling

Source: DRHP p.25. Rajesh Vasantray Doshi holds 49,862,280 shares, so the offer is 18% of that holding (our arithmetic, DRHP p.25).

10Promoters

The promoters are Rajesh Vasantray Doshi, Kunjal C Dedhia and Krishiv Rajesh Doshi (DRHP p.24). Rajesh Vasantray Doshi holds 99.99% of the shares; Kunjal C Dedhia holds 250 and Krishiv Rajesh Doshi none (DRHP p.25).

11Who already owns it

Source: DRHP p.25, DRHP p.26.

12What changed just before the IPO

• Customer: the largest customer rose to 20.90% of revenue (DRHP p.38).
• Receivables: debtor days up to 124 (DRHP p.119).
• Credit losses: ₹49.92 million provided in the six months (DRHP p.351).
• Private sales: now a tenth of revenue (DRHP p.37).
• Bonus issue: none since incorporation; the only shares issued for consideration other than cash were the 49,853,780 allotted in September 2020 for the takeover of the Hindustan Laboratories proprietorship (DRHP p.99).
• Auditor: no change in the statutory auditor in the three years before the filing; JAIN V & CO was re-appointed at the annual general meeting on 30 September 2024 (DRHP p.91).
• Public company: the company was incorporated as a public limited company in June 2017 (DRHP p.3).

13Capacity and expansion

One manufacturing facility at Palghar, about 100 km from Mumbai (DRHP p.196). The document says the company has spent significantly on capital expenditure in the last three years (DRHP p.28). The proceeds fund working capital, not plant (DRHP p.25).

14Market size and industry structure

The CARE report cited in the offer document says India ranks third in the world in pharmaceuticals by volume and 14th by value, with generics about 70% of industry revenue and more than 10,000 manufacturers (DRHP p.24). newboard has not tested the report's statements.

15Competitive position

What the document claims, and what it rests on:

• A track record in government tenders across 27 states and union territories (DRHP p.24).
• Certified manufacturing: ISO 9001, WHO-GMP and GLP (DRHP p.196).

Against that: a highly competitive generics market, one plant, dependence on government tenders, and slow payment (DRHP p.28, DRHP p.119).

16Peers the company named

Source: DRHP p.118. Peer P/E uses prices on 17 December 2025. The peer table's total-income figures were not used here.

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Competition. Generic tenders are won on price (DRHP p.28).
• One plant. All manufacturing at Palghar (DRHP p.28).
• Government customers. About 90% of revenue (DRHP p.28, DRHP p.37).
• Receivables. Debtor days of 124 (DRHP p.119).
• Quality. Failing a specification can lose orders (DRHP p.28).

18Litigation and regulatory matters

Source: DRHP p.28. The amounts in criminal proceedings are not quantified (DRHP p.28).

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• Who the largest customer is, at 20.90% of recent revenue.
• How old the receivables are, and which states owe them, in the pages read.
• What the six criminal proceedings against promoters concern.
• Why the credit-loss provision rose in the six months.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Which government agency is the largest customer, and how quickly does it pay?
2. What caused the ₹50 million credit-loss provision in the six months?
3. Why has operating cash flow fallen each year while profit rose?
4. What do the criminal proceedings against the company and promoters concern?
5. How will the business change once the founder no longer owns almost all of it?

1Sources and cited facts

This study was read from 1 document the company filed. The 51 figures it cites are listed under the document each came from, with the page and the sentence as printed.