Innova Captab may be a good buy after a post-listing review
Innova Captab is rolling out a ₹570-crore IPO that includes a fresh issue of ₹320 crore and the rest an offer for sale. The promoters Manoj Kumar Lohariwala and his brother Vinay Kumar Lohariwala are diluting their stakes from 67% to 52%. Of the issue proceeds, ₹168 crore would be used toward debt repayment and ₹72 crore for working capital requirements.
Business: Incorporated in 2005 as Harun Health Care, Innova Captab is a leading contract manufacturer of pharmaceutical formulations.
Its client list includes 14 of the top 15 Indian pharma companies as of FY21. The company also supplies international markets like Kenya, Afghanistan and Sri Lanka as well as selling trade generics in India. In June this year, the company acquired Sharon Bio-Medicine which supplies formulations, and active ingredients and provides contract research services to companies in the domestic as well as regulated markets outside India.
Factoring in Sharon's numbers, the Innova's proforma accounts for FY23 reflect 61% of revenues earned from contract manufacturing services and products, 15% from trade generics, 7% from international branded generics and 17% from Sharon Bio.
Financials and Growth Prospects: The company's revenues have grown from ₹410 crore in FY21 to ₹926 crore in FY23. During this period, its net profit too doubled to ₹68 crore. For FY23, its operating profit (Ebitda) margin stood at 13.3% and its return on capital employed (RoCE) at 22.6%.
