IPO listed on 29 Dec'23
Innova Captab Ltd
Minimum Investment
₹ 14,784 / 33 shares
Grey market premium
₹ 211 (47% premium)
Issue price
₹ 448
Listing price
₹ 452
Listing day %
21%
Listing on
Dec 29, 2023
Subscribe for listing gains
- Innova Captab Ltd (ICL) primarily serves leading pharmaceutical companies in India through its CDMO division. The firm has demonstrated an impressive performance over the last three years, with significant growth in revenue and profits, and robust return ratios.
- Regarding its valuation, the stock appears to be fully priced, with a PE multiple of 36.4x based on the forecasted earnings for FY24. Nonetheless, the grey market premium indicates a potential for a strong debut on the stock market.
- While the recent acquisition of Sharon Bio Pharma and the expansion of operations in Jammu open doors to new markets and promise increased volume growth, concerns about limited pricing power and a demanding valuation are noteworthy.
- Considering these factors, investors are advised to subscribe to the IPO for potential listing gains. Long-term investors, however, should closely observe the company's performance in the upcoming quarters to evaluate its long-term viability and growth prospects before committing to further investments.
About the company
Founded in
3 Jan'05
Managing director
Vinay Lohariwala
- ICL operates as a comprehensive pharmaceutical enterprise, involved in various aspects of the pharmaceutical industry including research, development, production, drug distribution, marketing, and international trade.
- The firm’s business is segmented into three main areas: (i) a contract development and manufacturing organization (CDMO) segment offering manufacturing services to other pharmaceutical companies in India; (ii) a segment dedicated to the domestic branded generics market; and (iii) a segment focusing on the international branded generics market.
STRENGTHS
- Market Leadership: ICL holds a prominent position in India's pharmaceutical sector, being the third-largest in finished tablet and capsule production capacity. As per a CRISIL Report, in FY22, it was among the top Indian formulation CDMO companies, ranking third in operating revenue and net profit margin, and second in both operating profit margin and return on capital employed.
- Robust Financial Growth: ICL demonstrated remarkable growth from FY21 to FY23, achieving a Compound Annual Growth Rate (CAGR) of 50% in Revenue, 48% in EBITDA, and 40% in Net Profit.
- Superior Returns: In FY23, ICL recorded an outstanding Return on Capital Employed of 22.61% and a Return on Net Worth of 24.58%, exceeding the performance of its competitors.
- Prestigious Clientele: ICL’s CDMO business boasts an esteemed clientele, including notable names such as Cipla, Glenmark, Lupin, Mankind Pharma, and Wockhardt.
RISK FACTORS
- Dependence on Key Clients: For FY23, ICL's top 10 clients constituted 56% of its CDMO business revenue. A loss or reduced business from any of these major customers could substantially impact the company's financial health.
- Subpar Operating Margins: ICL's operating margins, averaging between 12-14%, align with those of its close competitor, Windlas Biotech. However, this margin is lower than the average of ~20% seen across its broader peer group.
- Requirement for Extensive Working Capital: Operating in the pharmaceutical sector, ICL needs significant working capital for continued growth. This is due to the extended time between acquiring raw materials and selling the finished products. As of October 2023, the firm had an outstanding working capital facility amount of Rs 158.55 crore. Failing to maintain adequate working capital could adversely affect operational performance.
- Risks Associated with Subsidiary: ICL’s subsidiary, Sharon, faces operational challenges, including suspension from trading on Stock Exchanges. Additionally, Sharon has not yet received approval for the delisting of its shares from the Stock Exchanges, which is a part of its corporate insolvency resolution plan.
Issue details
Issue type
Mainstream
Issue size
₹ 570 crore
Fresh Issue
₹ 320 crore
OFS
₹ 250 crore
Price range
₹ 426 - 448
Lot size
33 shares
Issue Objective
The company proposes to utilise the net proceeds from the fresh issue towards funding the following objects:
- Repayment of certain outstanding loans availed by the company and its subsidiary;
- Funding its working capital requirements; and
- General corporate purposes
Dates
Bidding open
21 Dec'23
Bidding close
26 Dec'23
Allotment date
27 Dec'23
Refund date
28 Dec'23
Listing
29 Dec'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.