The year is almost ending. But the IPO frenzy in India is nowhere close to cooling down anytime soon.
Another day, and we are back with the details of another IPO!
Innova Captab is inviting you to be a part of the country’s life-saving sector – the pharmaceutical industry. If helping patients and communities interests you, this could be a prospect you would want to grab with both hands.
In today’s article, we will discuss the details of Innova Captab’s IPO, its financials, and the benefits and risks of the investment.
Who is Innova Captab?
Innova Captab is a company in the pharmaceutical sector with its presence across different functions related to the production and distribution of medicines.
Also read: The pharmaceutical industry in India and its contribution to the world
Innova Captab History
The company was founded in 2006, with a manufacturing facility in Himachal Pradesh. In 2013, Innova crossed ₹500 million in revenue and received international recognition for Good Manufacturing Practices (GMP).
Innova Captab Vision
“To improve the quality of life of the communities in which we operate and, in doing so, to build a better and sustainable way of life for the weaker sections of society.”
Innova Captab today
Innova Captab crossed a revenue of ₹3,000 million in 2019. Today, the company has branches in 15 countries with over 1,000 employees. Innova works with most of the top-ranking companies in the pharmaceutical sector. It is also the 2nd largest domestic CDMO (Contract Development and Manufacturing Organisation) in India.
Innova Captab’s product list includes tablets, capsules, syrups, injections, ointments and related items.
The company also has a devoted internal research and development team working towards developing new medicinal formulations.
Innova Captab financials
| Particulars | FY 2023 (₹ million) | FY 2022 (₹ million) | FY 2021 (₹ million) |
| Revenue from operations | 9,263.80 | 8,005.26 | 4,106.62 |
| Expenses | 8,437.83 | 7,176.89 | 3,656.89 |
| Profit after tax | 679.54 | 639.53 | 345.00 |
| Earnings per share | 14.16 | 13.32 | 7.19 |
| Debt-Equity ratio | 0.85 | 0.95 | 0.31 |
| Return on equity | 24.58% | 30.66% | 23.82% |
| Fixed asset turnover ratio | 5.37 | 5.10 | 4.88 |
| Return on capital employed | 22.61% | 23.46% | 26.54% |
Innova Captab Ltd’s IPO details
| Innova Captab’s IPO opening date | 21 December 2023 |
| IPO closing date | 26 December 2023 |
| Bidding date for anchor investors | 20 December 2023 |
| Face value | ₹10 per share |
| Innova Captab’s price band | ₹426 to ₹448 |
| Issue size | ₹520 crore (Book building IPO) |
| Fresh issue | ₹320 crore |
| Offer for sale | ₹250 crore |
| Minimum bids | 33 shares |
| IPO reservations | Anchor investors – 30% Qualified institutional buyers – 20% Non-institutional investors – 15% Retail investors – 35% |
Also read: Fundamentally analysing Solara Active Pharma Sciences Ltd.
Innova Captab’s shareholding pattern before the IPO
| Name of the shareholder | Shareholding % |
| Manoj Kumar Lohariwala | 38.10% |
| Gian Parkash Aggarwal | 28.98% |
| Vinay Kumar Lohariwala | 28.82% |
| UTI Multi Opportunities Fund | 2.82% |
Fund utilisation plan
The portion of funds received from the offer for sale will be used to compensate the selling shareholders.
The proceeds received from the fresh issue in IPO will be utilised as below:
- ₹144 crores will be spent on repaying existing loans, either fully or partially.
- ₹23.6 crores will be invested in Innova’s subsidiary, Univentis Medicare Limited (UML), to repay the outstanding loans of UML.
- ₹72 crores will be utilised in the company’s working capital requirements.
- The remaining funds will be utilised towards general corporate requirements.
Is Innova Captab a valuable addition for you?
Innova Captab operates in the pharmaceutical sector. Pharmacy is required for the health of the citizens. Its significance in saving people’s lives makes it an essential sector for the country. Hence, pharmacy is a non-cyclical / defensive stock, which suggests that the stock prices will not have adverse impacts during economic events.
Owning pharmacy stocks could potentially balance your portfolio’s risk. The other relevant factors are:
- The company’s financial statements show consistent growth, both in terms of revenue and profits. According to CRISIL’s report, Innova was ranked number three in revenue in the CDMO sector.
- The demand for branded generics in the domestic market and international exports is rising. Following the trend, Innova is actively involved in the production and distribution of branded generic medicines. For the financial year 2023, 26.6% of the company’s revenue came from branded generics.
- The company has a feather on the cap with two world-class manufacturing facilities. Innova was ranked number three by CRISIL for tablet and capsule manufacturing establishments. The firm is constantly working towards increasing efficiency and decreasing costs by using technological automation wherever possible.
- Innova has a strong relationship with its customers, most of whom are big names in the pharmaceutical industry. In FY 2023, the firm had 182 customers, including Cipla Limited, Glenmark Pharmaceuticals Limited, Wockhardt Limited, Emcure Pharmaceuticals Limited, and more.
- The company is one of the fastest-growing firms in the CDMO sector and ranked number three with respect to profit margin. Innova is backed by a strong team of management and promoters, with the chairman having over 26 years of experience in the pharma sector.
| Industry peers | ||||
Company | Revenue from Operations (In ₹ million) | EPS – Basic (In ₹) | NAV (₹ per share) | P/E ratio |
| Innova Captab Limited | ₹9,263.80 | ₹14.16 | ₹57.60 | NA |
| Torrent Pharmaceuticals Limited | ₹96,201.50 | ₹36.79 | ₹182.97 | 57.61 |
| Laurus Labs Limited | ₹60,405.50 | ₹14.64 | ₹74.92 | 25.53 |
| Ajanta Pharma Limited | ₹37,426.40 | ₹45.89 | ₹267.41 | 42.91 |
| J. B. Chemicals and Pharmaceuticals Limited | ₹31,492.83 | ₹53.00 | ₹320.36 | 28.61 |
| NATCO Pharma Limited | ₹27,071.00 | ₹39.18 | ₹264.21 | 19.90 |
| Eris Lifesciences Limited | ₹16,851.49 | ₹28.10 | ₹160.85 | 33.01 |
| Indoco Remedies Limited | ₹16,686.11 | ₹15.44 | ₹111.58 | 22.74 |
| Suven Pharmaceuticals Limited | ₹13,403.29 | ₹16.16 | ₹68.16 | 37.13 |
| Windlas Biotech Limited | ₹5,130.83 | ₹19.7 | ₹192.02 | 22.04 |
Also read: Torrent Pharmaceuticals Ltd.
Watch out for the following
- The company operates in a highly competitive environment. India has over 400 organised players and over 15,000 unorganised players in the CDMO sector. Bigger competitors may respond better to market events compared to Innova.
- The company recently acquired Sharon Bio-medicine Limited, which is now a subsidiary of UML. Innova infused a capital of ₹1,954.00 million in Sharon, the benefit of which can be reaped only if Sharon’s business integrates well with the other business functions of Innova.
- The business of Innova is capital-intensive and relies heavily on machinery. The failure or breakdown of machinery can obstruct operations.
- The company has a limited number of customers from the CDMO sector. In FY 2023, 56% of the revenue came from top 10 customers. This concentration can be negative in case of disputes and disagreements with customers.
- Since the business is actively involved with people’s health and lives, compliance with quality standards is of utmost importance. The failure of this can have serious effects, even to the extent of delicensing.
- Innova is heavily reliant on China and Hong Kong for raw materials. Economic events in China and the relationship between India and China are crucial for the business to run without issues.
Bottomline
If your portfolio is currently exposed to cyclical stocks, whose prices change with economic events, Innova’s IPO could be an interesting option to balance the risk.
However, the company works in a sensitive industry. Hence, it is necessary to consider all the risk exposures before making the decision.
