Innova Captab Limited IPO

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  1. Business Segments:
    • The company operates across the pharmaceutical value chain, including research and development, manufacturing, drug distribution, marketing, and exports.
    • The business is divided into three main segments: Contract Development and Manufacturing Organization (CDMO), Domestic Branded Generics, and International Branded Generics.
  2. Performance and Rankings:
    • In Fiscal 2022, the company achieved notable rankings among Indian formulation CDMO players, recording the third-highest operating revenue, the second-highest operating profit margin, the third-highest net profit margin, and the second-highest return on capital employed, according to the CRISIL Report (October 2023).
  3. CDMO Business:
    • The CDMO business provides manufacturing services to Indian pharmaceutical companies.
    • In Fiscal 2023, the company had 182 CDMO customers, and it manufactured a diverse portfolio of over 600 generic products for both the Indian market and exports.
    • The CDMO product portfolio covers various dosage forms, including oral solids, oral liquids, dry syrups, injectables, modified and sustained release forms, tablets in capsules, and products using new technologies like nanotechnology.
    • The company has experienced significant growth in CDMO, with the number of CDMO products sold growing by 131.43% from 1,066 in Fiscal 2021 to 2,467 in Fiscal 2023.
  4. Key CDMO Customers:
    • The company has developed relationships with key customers in the Indian pharmaceutical industry, including Cipla Limited, Glenmark Pharmaceuticals Limited, Wockhardt Limited, Lupin Limited, and others.
  5. Revenue Growth:
    • Revenue from operations, as per the Restated Consolidated Financial Information, has grown at a 50.19% CAGR from ₹4,106.62 million in Fiscal 2021 to ₹9,263.80 million in Fiscal 2023.
  6. Research and Development (R&D):
    • The foundation of the company is its in-house R&D, which helps attract and retain CDMO customers and grow the branded generic portfolio.
    • The company has a dedicated R&D laboratory in Baddi, Himachal Pradesh, recognized by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India.
  7. Manufacturing Facilities:
    • The company operates two manufacturing facilities in Baddi, Himachal Pradesh, with plans for a new facility in Jammu.
    • Facilities have Good Manufacturing Practices (GMP) certifications from the Health and Family Welfare Department, Himachal Pradesh, and WHO recommendations.
  8. Branded Generics Business:
    • The domestic branded generics business involves the development, manufacture, and distribution of generic formulation products marketed in India under the company’s own brand names.
    • The company has a diversified portfolio covering various therapeutic areas.
    • Revenue from the domestic branded generics business on a restated consolidated basis was ₹1,661.61 million in Fiscal 2023.
  9. International Branded Generics Business:
    • The international branded generics business focuses on exports to emerging and semi-regulated international markets, with plans for expansion into regulated markets like the United Kingdom and Canada.
    • Revenue from the international branded generics business on a restated consolidated basis has grown at a 42.38% CAGR from ₹397.91 million in Fiscal 2021 to ₹806.63 million in Fiscal 2023.
  10. R&D Team and Facilities:
    • As of October 31, 2023, the company employs a team of 29 scientists and engineers at its R&D laboratory.
    • The laboratory is equipped with advanced equipment for the development of solid oral and liquid dosage forms.
  11. Manufacturing Capacity and Rankings:
    • The company ranks third among peers in terms of its finished tablet and capsule manufacturing capacity in India, according to CRISIL Research.

Objects of the Innova Captab Limited IPO:

The Company proposes to utilise the Net Proceeds from the Fresh Issue towards funding the following objects: i. Repayment and / or prepayment in part or in full, of certain outstanding loans of the Company; ii. Investment in the Subsidiary, UML, for repayment and / or prepayment in part or full of outstanding loans availed by UML; iii. Funding the working capital requirements; and iv. General corporate purposes
DRHP of Innova Captab Limited IPO
RHP of Innova Captab Limited IPO

Innova Captab Limited IPO Details:

Open Date: Dec 21 2023
Close Date: Dec 26 2023
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 570 Cr.
Lot Size: 33 Shares
Issue Price: ₹ 426 - 448 Per Equity Share
Listing At: NSE,BSE
Listing Date: Dec 29 2023

Promoters And Management:

Manoj Kumar Lohariwala is the Chairman and Whole-time Director on the Board of the Company. He holds a bachelor’s degree in commerce from Mohta College, Sadulpur, Maharshi Dayanand Saraswati University, Ajmer, Rajasthan. He has approximately 26 years of experience in the field of manufacturing and marketing of pharmaceutical products. Before being associated with the Company, he served as the vice-president - marketing with Pharmatech Health Care. Vinay Kumar Lohariwala is the Managing Director on the Board of the Company. He holds a bachelor’s degree in engineering (mechanical) from Engineering College, Kota, University of Rajasthan, Jaipur, Rajasthan. He has approximately 21 years of experience in the field of manufacturing and marketing of pharmaceutical products. Before being associated with the Company, he served as the vice-president - manufacturing with Pharmatech Health Care. Jayant Vasudeo Rao is a Whole-time Director on the Board of the Company. He holds a bachelor’s degree in science (chemistry) from the Arts, Science and Commerce College, Panvel, University of Bombay, Maharashtra. He has approximately 18 years of experience in the field of production management for pharmaceutical formulations. Before being associated with the Company, he was associated with Ebers Pharmaceuticals Limited, Prophyla Biologicals Private Limited and Lexicon Biotech (India) Limited, and served as production head with Scott-Edil Pharmacia Limited and general manager (production and planning) with Brooks Laboratories Limited.

Financials of Innova Captab Limited IPO:

Particulars ( In Crore )
2021
2022
2023
3M-FY24
Revenue from Operations 411 801 926 233
Other Income 1 3 9 1
Total Revenue 412 803 936 234
Cost of materials consumed 301 574 647 166
Purchase of stock-in-trade 8 39 45 8
Change in Inventorie 2 5 0.2 -8
Employee benefits expenses 22 40 55 15
Other Expenses 23 46 66 21
EBITDA 56 99 123 32
Depreciation & Amortisation 6 8 11 3
Finance Cost 4 6 20 5
EBIT 50 91 112 30
OPM (%) 13.57% 12.31% 13.13% 13.82%
PBT 46 86 92 25
Tax 12 22 24 7
PAT 35 64 68 18
NPM (%) 8.37% 7.96% 7.26% 7.51%
No.of Shares 5.72 5.72 5.72 5.72
EPS 6.02 11.17 11.87 3.07

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Innova Captab Limited 926 68 11.87 37.7 448 2,564
Torrent Pharmaceuticals Limited 9,620 1,245 36.79 54.3 2,155 72,928
Laurus Labs Limited 5,773 760 14.12 58.9 395 21,279
Ajanta Pharma Limited 3,743 588 45.89 35.6 1,865 23,482
J. B. Chemicals and Pharmaceuticals Limited 3,149 410 26.48 46.7 1,465 22,707
NATCO Pharma Limited 2,707 715 39.18 12.2 766 13,722
Eris Lifesciences Limited 1,685 374 28.10 31.6 875 11,902
Indoco Remedies Limited 1,669 142 15.44 31.9 393 3,620
Suven Pharmaceuticals Limited 1,340 411 16.16 39.2 665 16,929
Windlas Biotech Limited 513 43 20.04 18.8 423 879
* All the data is as per FY23.

Recommendation on Innova Captab Limited IPO:

Review and Recommendation of Innova captab IPO by IZ team is 5/10

Business Model Overview

Innova Captab Limited operates in the pharmaceutical sector with a diversified approach covering the entire value chain - from research and development (R&D) to manufacturing and distribution. The company's business is segmented into Contract Development and Manufacturing Organization (CDMO), Domestic Branded Generics, and International Branded Generics. 1. CDMO Segment: This segment caters to Indian pharmaceutical companies, manufacturing over 600 generic products, and experienced a substantial growth of 131.43% in product sales between Fiscal 2021 and 2023. 2. Domestic Branded Generics: Focuses on the development, manufacture, and distribution of generics in India under the company's brand. 3. International Branded Generics: Targets exports to emerging and semi-regulated markets, with expansion plans into regulated markets.

Financial Performance and Growth

1. Revenue Growth: The company's revenue from operations grew at a CAGR of 50.19% from ₹410 Cr in Fiscal 2021 to ₹926 Cr in Fiscal 2023. 2. Profit Margins: Innova Captab Limited recorded the second-highest operating profit margin and the third-highest net profit margin among Indian formulation CDMO players in Fiscal 2022. 3. Manufacturing Capacity: Ranks third among its peers in finished tablet and capsule manufacturing capacity in India.

Peer Comparison and Market Position

1. Market Capitalization: With a market cap of ₹2,564 crore, Innova Captab is a significant player but smaller compared to peers like Torrent Pharmaceuticals and Laurus Labs. 2. P/E Ratio: The company's P/E ratio stands at 37.7, which is competitive when compared to peers like Torrent Pharmaceuticals (P/E of 54.3) and Ajanta Pharma (P/E of 35.6).

R&aD and Manufacturing Capabilities

1. R&D Facilities: The company's dedicated R&D laboratory in Baddi is a cornerstone of its innovation, attracting and retaining CDMO customers. 2. Manufacturing Facilities: Two facilities in Baddi with GMP certifications, and plans for a new facility in Jammu, underline the company's commitment to quality and expansion.

Management and Leadership

Experience: The top management, including Manoj Kumar Lohariwala and Vinay Kumar Lohariwala, brings over two decades of experience in pharmaceutical manufacturing and marketing.

Objectives of the IPO

The IPO aims to raise ₹570 crore, with the following objectives: 1. Repayment/prepayment of outstanding loans. 2. Investment in subsidiary UML for loan repayment. 3. Funding working capital requirements. 4. General corporate purposes.

Conclusion

Innova Captab Limited presents a robust business model with significant growth in revenue and profitability. Its strong position in the CDMO segment, coupled with expanding branded generics businesses both domestically and internationally, underlines its potential for sustained growth. The company's competitive P/E ratio, relative to its peers, indicates a favorable market perception. The experienced management team and focused R&D efforts further enhance its market positioning, making the IPO an attractive proposition for investors seeking exposure in the pharmaceutical sector.

Lead Manager of Innova Captab Limited IPO:

  1. ICICI Securities Limited
  2. JM Financial Consultants Private Limited

Registrar of Innova Captab Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Innova Captab Limited 601, Proxima, Plot No. 19, Sector 30 A, Vashi, Navi Mumbai, 400 705 Phone: +91 22 2564 2095 Email: investors@innovacaptab.com Website: https://www.innovacaptab.com/

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