The initial public offering (IPO) of Innova Captab will open for bidding on Thursday, December 21. The pharmaceutical player will be selling its shares in the range of Rs 426-448 apiece with a lot size of 33 equity shares and its multiples thereof. The bidding for the issue will close on Tuesday, December 26. Incorporated in January 2005, Innova Captab is a pharmaceutical company operating in three business segments. It provides contract development and manufacturing services to Indian pharmaceutical companies. It also deals in branded generics. The company is looking to raise a total of Rs 570 crore via IPO. This comprises of a fresh share sale of Rs 320 crore and an offer-for-sale (OFS) of up to 55,80,357 equity shares by its promoters Manoj Kumar Lohariwala and Vinay Kumar Lohariwala, along with other shareholder Gian Parkash Aggarwal. The net proceeds from the issue shall be utilised towards repayment and/or prepayment in part or in full; investment in the subsidiary UML for repayment and/or prepayment in part or full of outstanding loans availed by UML. The proceeds will also be used for funding the working capital requirements and general corporate purposes. The company's product portfolio includes tablets, capsules, dry syrups, dry powder injections, ointments and liquid medicines. In the financial year 2023 and the three months ended June 30, 2023, the company sold more than 600 different types of generics.
Innova Captab's manufacturing facility is located in Baddi, Himachal Pradesh. Its customer base includes Cipla, Glenmark Pharmaceuticals, Wockhardt, Corona Remedies, Emcure Pharmaceuticals, Lupin, Medley Pharmaceuticals, Eris Healthcare, Zuventus Healthcare, Ajanta Pharma, Mankind Pharma, and others. Innova Captab reported a net profit of Rs 17.59 crore with a revenue of Rs 234.37 crore for the period ended on June 30, 2023. The company clocked a net profit of Rs 67.95 crore with a revenue of Rs 935.58 crore for the financial year ended on March 31, 2023. Innova Captab has reserved 50 per cent of the net offer for the qualified institutional bidders (QIBs), while non-institutional investors will get 15 per cent of the net offer. Remaining 35 per cent of issue shall be allocated towards the retail investors of the issue. ICICI Securities and JM Financial are the book running lead managers of the Innova Captab IPO, while Kfin Technologies is the registrar for the issue. Shares of the company are likely to be listed at the bourses on both BSE and NSE, with Friday, December 29 as the tentative date of listing. Here's what a host of brokerage firms said about the Innova Captab IPO:Anand Rathi Research Rating: Subscribe for long-term Anand Rathi said Innova Captab operates in three business segments and has a diverse generics product portfolio of over 600 products is marketed in India through an extensive network of distributors, stockists, and retail pharmacies, said Anand Rathi Research. "At the upper price band, the company is valued at P/E of 48.6 times with a market cap of Rs 3,307.4 crore post issue of equity shares," it said adding: "We believe that valuations of the company are fairly priced and recommend a 'subscribe for long term' rating for the issue."Swastika Investmart Rating: Subscribe Innova Captab's strong position as a generic pharma manufacturer, coupled with well-established relationships with key CDMO clients, positions the company for continued growth, said Swastika Investmart. Innova Captab's domestic and international branded generics businesses are exhibiting rapid expansion but the competition remains a significant challenge to consider, Swastika Investmart said. "Innova Captab boasts highly efficient operations, a robust R&D facility, and a track record of consistent financial performance. Overall, Innova Captab's strong market position, growth potential, and focus on innovation make it a promising investment, despite the competitive landscape and premium valuation," it added with a subscribe rating for the issue.Reliance Securities Rating: Subscribe Reliance Securities said Innova Captab has presence across the pharmaceutical value chain with industry leading fixed asset turnover and ROCE in FY21 and a customer base with 14 of the top 15 pharma companies. "The increased expansion over the next 2 years envisaged increase in demand and leveraging the customer relationships for domestic branded generics; international generics growth in Sharon Bio Medicine and taxation benefits from the new plant will boost earnings over the next few years," it said while suggesting a 'subscribe' rating on the IPO.Choice Broking Rating: Subscribe Choice Broking said the company is well positioned to benefit from the expansion in the domestic CDMO market. Acquisition of Sharon assets would assist ICL in expanding its exports operations, but successful integration would be key, it said.
"The Jammu facility will start contributing to the top-line in H2 FY25E. The management has indicated an asset turn of around 4-5 times, however ramp-up would be gradual. Considering the medium-term growth levers and favorable demanded valuation, we assign a 'subscribe' rating for the issue," said.Ajcon Global Services Rating: Subscribe for listing gains Ajcon Global recommended investors to ‘subscribe for listing gains’ as the Indian CDMO space has seen traction in the recent times with big pharmaceutical companies preferring to outsource R&D as well as manufacturing activities, the same generates very low margins. "At the upper price band of Rs 448 the issue is valued at a P/E multiple 36.45 times its Q1FY24 post issue annualized EPS of 12.29 and 37.74x its FY23 post issue annualized EPS of 11.87, compared to the industry average P/E multiple of 32.17, which makes the issue expensive," it said.
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