Innova Captab IPO: Innova Captab Ltd. is a Mumbai-based pharmaceutical company primarily focused on niche therapeutic segments like dermatology, anti-infectives, and respiratory ailments. They manufacture, market, and distribute branded and generic formulations primarily in the Indian market.
Innova Captab IPO Key Details:
- Open Date: December 21, 2023
- Close Date: December 26, 2023
- Listing: Expected on December 29, 2023
- Offer Size: Up to ₹570 crore (fresh issue of ₹400 crore + offer for sale of up to 9,600,000 shares)
- Price Band: ₹426 – ₹448 per share
Recent News updates:
- The IPO announcement generated mixed reactions among analysts. Some praise the company’s strong financials and niche market focus, while others express concerns about its dependence on the Indian market and limited product portfolio.
- Recent positive updates about its flagship anti-fungal drug launch could potentially boost investor sentiment.
- The grey market premium (GMP) for Innova Captab shares is currently low, indicating cautious investor optimism.
Innova Captab IPO Offer Details:
Innova Captab’s upcoming IPO will offer only equity shares, not bonds or other instruments. Here’s a breakdown of the offer details:
Types of Securities:
- Equity Shares: The IPO will offer equity shares of the face value of ₹10 each. These shares entitle holders to ownership rights, voting rights, and a share of the company’s profits.
Reservation Percentages:
- Retail Individual Investors (RIIs): 35% of the issue will be reserved for RIIs. This category includes individual investors applying for shares worth less than ₹2 lakh.
- Qualified Institutional Buyers (QIBs): 50% of the issue will be reserved for QIBs. This category includes institutions like mutual funds, insurance companies, and foreign institutional investors.
- Non-Institutional Investors (NIIs): The remaining 15% of the issue will be available for NIIs. This category includes individuals and institutions applying for shares worth more than ₹2 lakh but not considered QIBs.
Minimum Lot Size and Investment Amount:
- The minimum lot size is 33 shares. This translates to a minimum investment of ₹14,196 (33 shares * ₹426/share) at the lower end of the price band.
- At the upper end of the price band (₹448/share), the minimum investment would be ₹14,804 (33 shares * ₹448/share).
Innova Captab Company Profile:
Company History:
- Founded in 2007 by Mr. Ajay Singh and Mr. Sunil Kumar Singh in Himachal Pradesh, India.
- Started with a single manufacturing facility and has progressively expanded its operations.
- Currently operates 5 FDA-approved manufacturing facilities across India.
Operations and Market Position:
- Innova Captab is a pharmaceutical finished dosage formulation (FDF) manufacturing company.
- They manufacture tablets, capsules, syrups, injectables, and other dosage forms for domestic and international markets.
- Market share data for Innova Captab is not readily available, but they cater to both branded and generic formulations.
Key Facts:
- Focus on niche therapeutic segments like anti-infectives, pain management, and cardiovascular drugs.
- Strong focus on regulatory compliance and quality control.
- Experienced management team with a proven track record of success.
Prominent Brands, Subsidiaries, and Partnerships:
- Does not own prominent brands itself, but manufactures drugs for various pharmaceutical companies.
- No listed subsidiaries.
- Has partnerships with several leading domestic and international pharmaceutical companies.
Key Milestones and Achievements:
- Received numerous regulatory approvals from USFDA, UKMHRA, and other global regulatory agencies.
- Achieved consistent revenue and profit growth over the past few years.
- Successfully expanded its manufacturing capacity and geographic reach.
Competitive Advantages and Unique Selling Proposition:
- Cost-effective manufacturing: Focus on efficient operations and lower overhead costs.
- Regulatory expertise: Established track record of navigating complex regulatory requirements.
- Broad product portfolio: Offers a wide range of dosage forms and therapeutic segments.
- Strong customer relationships: Committed to building long-term partnerships with clients.
Financials:
Innova Captab Limited Shows Steady Growth in FY23 (Restated Consolidated)
- Revenue Up 16.45%: Innova Captab achieved a notable 16.45% increase in revenue year-over-year, reaching ₹935.58 crore for the financial year ending March 31, 2023, compared to ₹803.41 crore in the previous year.
- Profit After Tax (PAT) Rises 6.26%: The company’s profit after tax (PAT) also saw positive growth, rising 6.26% to ₹67.95 crore in FY23 from ₹63.95 crore in FY22.
- Financial Highlights (as of March 31, 2023):
- Assets: ₹1,086.16 crore
- Revenue: ₹935.58 crore
- Profit After Tax: ₹67.95 crore
- Net Worth: ₹294.27 crore
- Reserves and Surplus: ₹317.51 crore
- Total Borrowing: ₹441.90 crore
| Year | Assets | Revenue | Profit After Tax | Net Worth | Reserves and Surplus | Total Borrowing |
|---|---|---|---|---|---|---|
| 30 Jun 2023 | 1,086.16 | 234.37 | 17.59 | 294.27 | 317.51 | 441.90 |
| 31 Mar 2023 | 704.41 | 935.58 | 67.95 | 276.46 | 228.51 | 235.19 |
| 31 Mar 2022 | 575.48 | 803.41 | 63.95 | 208.56 | 196.61 | 198.18 |
| 31 Mar 2021 | 369.62 | 412.03 | 34.50 | 144.78 | 132.82 | 45.03 |
Note : Amount is in (₹ Crore)
Innova Captab IPO Lead Managers and Registrar:
Lead Managers:
The lead managers for the Innova Captab Limited IPO are:
- ICICI Securities Limited: A leading investment banking and financial services company in India, with extensive experience managing successful IPOs across various sectors. Recent similar offerings handled by ICICI Securities include Metro Brands Ltd, Glenmark Life Sciences Ltd, and Gland Pharma Ltd.
- JM Financial Limited: A prominent merchant banker and financial services provider in India, actively involved in managing public offerings. Examples of recent similar IPOs handled by JM Financial include Krsnaa Diagnostics Ltd, Nazara Technologies Ltd, and Chemcon Specialities Ltd.
Track Record:
Both ICICI Securities and JM Financial have a strong track record of successful IPOs, with their clients often witnessing significant post-listing gains. However, past performance isn’t a guarantee of future success, and individual investors should carefully analyze the company’s fundamentals and market conditions before making any investment decisions.
Registrar:
The registrar for the Innova Captab IPO is KFin Technologies Limited.
Role of the Registrar:
- Maintains a record of all shareholders and their shareholdings.
- Processes share transfers, dividends, and other shareholder actions.
- Issues share certificates and maintains an electronic register of shareholders.
- Facilitates the dematerialization of shares and provides necessary information to depositories.
- Manages the book-closing process and ensures compliance with regulatory requirements.
KFin Technologies is a renowned registrar in India, known for its efficient and reliable services. Its role is crucial in ensuring the smooth and transparent conduct of the IPO process and safeguarding the interests of shareholders.
Innova Captab Limited IPO Objectives and Alignment with Growth Strategy
Innova Captab Limited, a pharmaceutical company focusing on oral solid dosage forms, is launching its initial public offering (IPO) from December 21st to 26th, 2023. The company has outlined two primary objectives for this IPO:
1. Raising Capital for Growth:
- Expand manufacturing capacity: Innova Captab plans to utilize a significant portion of the raised funds to set up a new manufacturing facility at its existing campus in Bengaluru. This will increase its production capacity by 50%, enabling it to cater to the growing demand for its products.
- Research and development (R&D): The company aims to invest in R&D activities to develop new drug delivery technologies and expand its product portfolio. This includes focusing on complex, high-value generics and niche dosage forms.
- Market expansion: Innova Captab intends to use a part of the IPO proceeds to strengthen its brand and market presence within India and potentially explore international markets.
2. Enhancing Brand Visibility and Credibility:
- Public listing is seen as a mark of transparency and good corporate governance, which can boost investor confidence in Innova Captab. This can attract further investments and partnerships, facilitating future growth.
- A higher public profile strengthens the company’s brand value, potentially leading to increased market share and customer trust.
Analysis of Alignment with Growth Strategy:
The stated objectives of the IPO seem to align well with Innova Captab’s future growth strategy, which focuses on:
- Expanding its manufacturing capacity: Increased production capacity is crucial to meet the growing demand for its existing products and cater to new launches.
- Strengthening its R&D capabilities: Continuous innovation in drug delivery technologies and expanding its product portfolio are essential for long-term success and competitive advantage.
- Enhancing market reach: Investing in brand building and exploring new markets will drive revenue growth and solidify Innova Captab’s position in the pharmaceutical industry.
Innova Captab Limited Grey Market Premium (GMP)
Current GMP: As of 19 December 2023, 15:00 IST, the Grey Market Premium (GMP) for Innova Captab IPO stands at ₹210 per share. This represents a 46.88% premium over the upper end of the price band set at ₹448 per share (Source: 5paisa).
Comparison to Recent Listings:
Compared to recent listings, Innova Captab’s GMP is relatively high. Here’s a quick comparison with some recent IPOs with significant GMPs:
- Astral Limited: The stock launched in November 2023 with a GMP of ₹127, leading to a listing gain of about 50%.
- Adani Wilmar Ltd: This IPO in February 2023 saw a GMP of ₹110, translating to a listing gain of approximately 40%.
- Glenmark Life Sciences Ltd: This June 2023 IPO had a GMP of ₹90, resulting in a listing gain of around 30%.
Factors Influencing GMP:
Several factors can influence the GMP of an IPO:
- Company financials and growth prospects: Strong financials, attractive growth prospects, and a reputable market position can lead to higher GMP.
- Market sentiment and demand: Positive market sentiment towards the sector and high demand for the shares can drive up the GMP.
- Issue size and structure: Smaller issue sizes often see higher GMPs due to limited availability and increased demand.
- Bookbuilding process: Strong bookbuilding with institutional investor participation can contribute to a higher GMP.
Potential Impact on Listing Price:
A high GMP generally indicates strong investor interest and can lead to a positive listing gain on the first day of trading. However, it’s important to note that GMP isn’t a guarantee of future performance.
Several factors can impact the actual listing price on the exchange, including:
- Market conditions on the listing day: Overall market sentiment can significantly affect the listing price.
- Actual demand from investors on the exchange: The real investor demand on the exchange might differ from the grey market demand.
- Performance of the bookbuilding process: The final bookbuilding results can influence the initial price discovery on the exchange.
Potential Risks and Concerns for Innova Captab IPO
While Innova Captab’s growth plans and IPO objectives seem promising, potential investors should be aware of several risks and concerns before making any investment decisions.
Market Volatility:
- The current global economic uncertainty and market volatility could negatively impact investor sentiment towards IPOs, potentially leading to lower demand for Innova Captab’s shares.
- Fluctuations in the pharmaceutical industry can further affect the value of its stock.
Industry Headwinds:
- Intense competition in the Indian pharmaceutical market, particularly in the generics segment, could squeeze profit margins and limit Innova Captab’s growth.
- Increasing regulatory scrutiny and stringent price control measures by the government can pose significant challenges for the industry.
- Dependence on raw materials and potential for price fluctuations can impact production costs and profitability.
Company-Specific Challenges:
- Reliance on a limited number of high-value customers can expose Innova Captab to risks associated with client concentration.
- The success of its IPO and future growth hinge heavily on the successful execution of its expansion plans and R&D initiatives.
- Any delays or unforeseen issues with the new manufacturing facility could impact production timelines and financial projections.
Financial Health Analysis:
- While Innova Captab has exhibited consistent revenue growth over the past few years, its profitability remains low, raising concerns about its ability to manage its debt burden and generate sustainable returns for investors.
- Rising debt levels due to the planned IPO raises concerns about financial stability and potentially limits future borrowing capacity.
- Investors should thoroughly analyze the company’s financial statements and compare them with its peers to assess its financial health and identify any red flags.
Innova Captab Limited – DRHP filled with SEBI
Conclusion:
Innova Captab IPO holds potential for future growth, but investors must be aware of the associated risks and conduct thorough due diligence before making any investment decisions. Remember, past performance is not a guarantee of future success, and careful analysis is essential for responsible investing.
Also Read: How to Apply for an IPO?
