Innova Captab Limited: CDMO play

Stock Opportunities Not-so-Hidden Gems
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Company Overview

Innova Captab Limited is pharmaceutical company incorporated in January 2005, operating in three key business segments in India’s pharmaceutical value chain CDMO, Domestic branded generic, international branded generic. The company claims to be country’s second-largest domestic formulations Contract Development and Manufacturing Organization (CDMO).

It ranks among the top three formulation CDMOs by revenue in India, serving 14 of the top 15 companies in the Indian branded market. The company deals in tablets, capsules, dry syrups, dry powder injections, ointments, and liquid medicines.

For Domestic Branded Generics it has network of approximately 5,000 distributors and stockists, reaching over 150,000 retail pharmacies.

Its International Branded Generics generates 12.5% of revenue with highest margin for them. They have R & D centre in Baddi and new one is coming up in Panchkula which shall assist them in their International business in future.

It has five manufacturing facilities 3 in Baddi, 1 in Dehradun, 1 in Taloja. New Unit in Jammu started producing revenue(44 cr) last qtr.

The Jammu factory has four dedicated blocks (general, cephalosporin, penicillin, and penum) established with a capital outlay exceeding ₹450 crores.

Company claims to be Second-largest domestic formulations CDMO in India and claims to work with 14 of top 15 Indian pharma companies

As per there various presentations, its units are WHO-GMP certified manufacturing facilities and has Strong R&D capabilities with 29 scientists and engineers

Its financial performance of past has been consistent .

Scuttlebutt with its supplier reveals that are very good pay master and reliable in terms of regular orders in comparison to other CDMO players.

New Jammu factory has government incentives like capital interest subvention and GST-linked incentives. This shall protect margins in highly competitive CDMO business and help them get new business and take advantage of india’s growing CDMO market. Company expects to generate 700cr revenue from Jammu by FY27.

It acquired Sharon Bio-Medicine in June 2023 ( CIRP ), It aims to capitalise on sharon’s International presence.

Overall Innova Captab seems to be investment opportunity in India’s rapidly expanding CDMO sector.

The recent commissioning of the Jammu facility, with its substantial capacity addition and government incentives, provides a significant growth catalyst. The company’s focus on operational excellence, combined with India’s cost advantages and regulatory compliance, creates a sustainable competitive moat.

www.innovacaptab.com

https://www.sebi.gov.in/filings/public-issues/dec-2023/innova-captab-limited-rhp_79995.html/

https://in.linkedin.com/company/innova-captab-pvt.-ltd.

Disc: Invested

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During Q4 concall, Management gave revenue guidance of Rs.400 cr for new Jammu facility over and above existing business which they expect to by 12-13% in FY26.

Management maintains 25% revenue CAGR, targeting ₹2,500 crore revenue in 3 years, they also expect to improve margins due to GST incentive at Jammu unit.

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Any thoughts on how their upcoming R&D facility might impact sales of Sharon?

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Currently they have one Research facility at Baddi and one is up coming in Panchkula, it shall assist them in achieving regulated market sales in years to come.

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Innova Captab -

Q1 FY 26 results and concall highlights -

Revenues - 351 vs 294 cr, up 19 pc
EBITDA - 56 vs 44 cr, up 28 pc ( margins @ 16.1 vs 15.1 pc )
PAT - 31 vs 29.5 cr, up 5 pc ( margins @ 8.8 vs 10 pc - due increased depreciation @ 11 vs 5 cr and interest costs @ 3 vs NIL YoY )

Segmental revenues -

CMO - 249 vs 230 cr, up 8 pc

Branded generics - 102 vs 64 cr, up 59 pc ( growth in domestic and international branded generics was led by broader geographic reach and increased penetration in domestic markets )

Geographical breakup of revenues -

Domestic - 70 vs 77 pc
International - 30 vs 23 pc

The new Jammu plant has 4 independent blocks for - Cephalosporins, Penems, Penicillins and General medicines. Jammu plant is capable of making dosage forms like Tablets, Capsules, Dry Powder Injections, Dry Syrups and large volume Parenterals and Respules

Plant wise capacity utilisations -

Baddi @ 50-55 pc ( optimum levels are about 75 pc )

Dehradun and Taloja @ 50-60 pc ( optimum levels are about 75 pc )

Jammu plant is currently in ramp up phase ( it commenced operations in mid Jan ). Company expects capacity ramp up 40-50 pc levels in next 2-3 yrs ( optimum levels are about 75 pc )

Seeing good demand from CMO partners + good demand from branded business - both should help them quickly ramp up their Jammu facility

Jammu facility should generate a revenue of aprox 400 cr ( as guided in Q4 LY ) - provided API prices remain constant ( however API prices are seeing double digit declines ). In Q1, revenues from Jammu plant amounted to 60 cr vs 36 cr in Q4 LY

Company’s Jammu plant is eligible for Govt benefits like - interest rate subvention + GST incentives. Company aims to pass through some of the benefits of these incentives to their customers. This should help them gain volumes in a significant manner

Most of the growth in branded generics has come from export markets

Baddi’s capacities being used for domestic mkts are being vacated to cater to export demands. The domestic business is being shifted to new Jammu plant ( incrementally ) - this shift should be completed by Q4

Company’s branded generics in India are sold under the brand name - Univentis. Its a 100 pc trade generics brand ( trade generic growth rates are higher than typical branded generics business - due Govt schemes like Ayushmann Bharat, Jan Aushadhi etc )

Jammu plant’s EBITDA and PAT breakeven shall be achieved @ Qtly sales run rate of 65 cr and 100 cr respectively

This plant’s peak revenue potential is > 1400 cr / yr

Disc: hold a small tracking position, not SEBI registered, not a buy/sell recommendation, posted for educational purposes

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very well covered Ranvir!

Need to study effect of change in GST rate from 12% to 5% on pharma medicines. Whether this will have any effect and reduce the margin cushion they had while fetching new customers?! As GSTLI payments will reduce by 7%

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the total incentive available to us is fixed is 75 Cr. So, to achieve the ₹75 crore incentive, today, need to sell approximately, let’s say, ₹600 crore plus, ₹620 crore. (Q1-26 Concall)
Since their incentive is fixed irrespective of the GST rate, they only need to increase the sales to receive full incentive

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true, to get 75 cr incentive they needed 620Cr of turn over. (which was approx first 1.5 years) Now they need turnover of Rs.1500 cr to fully avail the incentive.

my point was , if they hv treated their first 620 cr as 12% discount and might have signed contracts by passing on it as discounts(assuming they are eligible for incentive), now that as this benefit reduces to only 5% and the signed contracts might/likely suffer 7% loss.

so expect margin to drop to 12.5 / 13% for couple of years.

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In other words, the benefit gets stretched. They benefit for more longer but the quantum is reduced. On a net net basis they should be getting same benefit but by time value of money, this is still nkt as good. Regardless, I would not look too much into it as the end goal is that they should be able to perform without any govt benefit anyway

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Innova Captab Ltd – Deep Dive Analysis (2025).pdf (242.0 KB)

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Innova Captab -

Q3 FY 26 results and concall highlights -

Revenues - 450 vs 316 cr, up 42 pc

EBITDA - 71 vs 51 cr, up 40 pc ( margins @ 15.8 vs 16.1 pc )

PAT - 42 vs 34 cr, up 23 pc

Manufacturing facilities -

Baddi - 3 blocks - Tablets, Capsules, Dry syrups, Oral Liquids, Ointments, Dry powder injectables

Jammu - 4 blocks - Tablets, Capsules, Dry syrups, Respules, Parenterals, Dry powder injectables

Dehradun - 1 block - Tablets, Capsules

Taloja - 1 block ( API facility )

Eligible for GST benefits totalling upto 300 pc of investment made in Jammu plant + Interest rate subvention upto 6 pc

Segmental performance -

CMO business grew by 29 pc in Q3 ( @ 298 cr ) and 18 pc in 9Ms ( @ 813 cr ) - very strong growth

Branded generics business grew by 79 pc in Q3 ( @ 151 cr ) and 56 pc in 9Ms ( @ 368 cr ) - very strong growth ( also led by aggressive geographic expansions )

Domestic : Export sales breakup for 9Ms @ 68 : 32

Sales from Jammu plant in Q3 stood @ 89 cr ( in Q2 it was 60 cr ) - indicating a strong ramp up

Jammu facility has not had a positive contribution to EBITDA margins ( till now ). Still the numbers r looking strong. Once Jammu facility turns EBITDA positive, numbers can be even better ( should turn EBITDA positive wef Q4 )

Jammu facility is expected to turn profitable at annual sales run rate of > 400 cr

International geographic expansions is helping expand the branded generics business in a rapid fashion

Current capacity utilisations @ Baddi, Taloja, Dehradun facilities vary in the range of 55-60 pc ( as of Q3 ). Jammu is in ramp up phase ( the plant has a peak revenue potential of 1400 cr )

CMO facilities often peak out @ 70-75 pc capacity utilisation levels. That means the existing plants have an additional revenue potential of 15 - 20 pc

Disc: holding, small position, inclined to add more, not SEBI registered, not a buy/sell recommendation, posted for educational purposes

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Two recent news and its analysis.

  1. “ED probing Sharon’s old loan case and subsequent attachments!” This is Old promoters issue and nothing to do with Innova. Secondly attachment can’t happen on Sharon as it is not old promoter’s property.
  2. “ Huge Pledge creation “ Promoter hasn’t created any pledge, its done by one of the large investor who happens to be promoter’s ex partner. Also NDU safe guards that it won’t be sold in case of default.

Disc: Invested