Innova Captab makes flat start at Rs 456 against IPO price of Rs 448

Innova Captab marked the final mainboard debut of this calendar year, listing at barely 1 percent premium to issue price. The stock started trading at Rs 456 on the BSE and Rs 452 on the NSE against IPO price of Rs 448. While analysts had expected 10-20 percent listing gain, muted overall market momentum spoiled the mood.

The Rs 570-crore public issue of pharmaceutical company had received good response from investors with a subscription of 55.26 times during December 21-26. Qualified institutional buyers (QIBs) bought 116.73 times the portion set aside for them.

High networth individuals (HNIs) and retail investors also showed strong interest in the issue, subscribing 64.95 times the allotted quota and 17.15 times the reserved portion, respectively.

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The Himachal Pradesh-based finished dosage formulation manufacturing company recorded revenue growth at a CAGR of 50.2 percent during FY21-FY23, to Rs 926.4 crore in the year ended March FY23. Meanwhile the CDMO business grew at a CAGR of 35.36 percent during the same period to Rs 679.6 crore in FY23.

In its CDMO business, it provides products to several leading domestic pharma companies including Cipla, Glenmark Pharmaceuticals, Wockhardt, Emcure Pharmaceuticals, Lupin, Intas Pharmaceuticals, Indoco Remedies, Zuventus Healthcare, Ajanta Pharma, and Mankind Pharma.

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Innova Captab is going to utilise Rs 168 crore of net fresh issue proceeds for repaying debts of its own and its subsidiary, and Rs 72 crore for working capital requirements. The remaining proceeds will be kept for general corporate purposes.

Several analysts are optimistic on the stock due to improvement in operational performance which is expected to be driven by the ramping-up of operations in the recently acquired Sharon Bio-Medicine along with timely execution and commercialisation of a project in Jammu.Among risks, an important one to monitor is that the company relies on China, China SEZ and Hong Kong for its raw material supplies so any disruptions in the region could impact financials.