🧠 At a Glance
Innova Captab is an integrated pharma company with ₹1,244 Cr in FY25 revenue, ₹128 Cr profit, and a 15% EBITDA margin. It boasts 36% profit CAGR over 5 years and a growing CDMO business, but rising inventory, declining ROCE, and no dividend payout raise questions. Stock trades at 39x P/E.
🎬 1. Intro — “CDMO Champ or Just a Capital Junkie?”
Innova Captab came into the public market as a pharma growth machine:
- Strong CDMO biz 💊
- High-profile clients (Cipla, Mankind, etc.) 🤝
- Plants across Himachal & new Jammu facility 🏭
- ₹1,244 Cr in sales, ₹128 Cr in FY25 PAT 🚀
But now it’s:
- Sitting on 119 inventory days
- Showing falling ROCE (from 31% to 15%)
- Offering zero dividends
- And still priced at 39x earnings
So… time to dissect whether this stock is a healthier version of IPCA or a cash-burning placebo.
🧪 2. WTF Do They Even Do? (Business Model)
Innova Captab operates across 3 key pharma verticals:
- CDMO / Contract Manufacturing (B2B) – Their bread and butter
- Supplies formulations to big brands like Cipla, Lupin, Zydus
- 9 plants with capacity across tablets, capsules, ointments, syrups
- Own Brands (B2C) – Growing gradually
- Focus on therapeutic areas like pain relief, cold & cough, anti-infectives
- Export Business – Present in 20+ countries
- Regulated + semi-regulated markets
👉 CDMO = 80%+ of revenue
👉 B2C + Exports = future kicker
📊 3. Financials – Profit, Margins, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 926 | 1,081 | 1,244 |
| EBITDA Margin | 12% | 14% | 15% |
| Net Profit (₹ Cr) | 68 | 94 | 128 |
| EPS (₹) | 14.16 | 16.49 | 22.41 |
| ROE | 17% | 14% | 14.3% |
| ROCE | 24% | 19% | 14.6% |
✅ CAGR Profit Growth (5Y): 36%
✅ Sales Growth (5Y): 27%
❌ ROCE trending down despite profit growth
❌ Capex drag incoming
💰 4. Valuation – Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹867 |
| Market Cap | ₹4,962 Cr |
| P/E (TTM) | 38.6x |
| Book Value | ₹168 |
| P/B | 5.17x |
🧮 Fair Value Calculation:
Assume:
- Normalized PAT: ₹128 Cr
- PE Band (15–25x for CDMO-heavy pharma with low ROE)
🎯 Fair Value Range = ₹500 – ₹750
Current Price = ₹867
Implying: Valuation is stretched unless next leg of B2C/exports kicks in
🍿 5. What’s Cooking – News, Triggers, Drama
- 🏭 Jammu plant operational – Could double capacity once scaled
- 🤝 Sharon acquisition integrated – Boosts B2B + B2C capacity
- 🌍 Export focus – Currently small, but mgmt sees 3x growth by FY27
- 💸 IPO proceeds used for capex – No signs of slowing
🧠 Concall highlights:
“Expect margin improvement through scale, brand push, and process automation.”
But no update on dividend or capital return plan.
🧾 6. Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Net Worth | ₹959 Cr |
| Total Debt | ₹338 Cr |
| CWIP | ₹23 Cr |
| Inventory | ₹404 Cr (↑ YoY) |
| Total Assets | ₹1,568 Cr |
Debt is rising slowly, but manageable.
⚠️ Inventory build-up = working capital stress alert.
💵 7. Cash Flow – Sab Number Game Hai
| FY25 | ₹ Cr |
|---|---|
| CFO (Op Cash) | 64 |
| CFI (Capex) | -152 |
| CFF (Financing) | +92 |
| Net Cash | 4 |
🟢 Still cash flow positive
🔴 Capex eating into free cash — expect flat FCF for next 2 years
📈 8. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 14.3% |
| ROCE | 14.6% |
| OPM | 15% |
| Debtor Days | 97 |
| Inventory Days | 119 |
| Cash Conv. Cycle | 101 |
🟡 Above-average return ratios
🔴 But working capital is getting bloated = stress building
📉 9. P&L Breakdown – Show Me the Money
| Metric | FY25 |
|---|---|
| Revenue | ₹1,244 Cr |
| Operating Profit | ₹186 Cr |
| Other Income | ₹12 Cr |
| Interest | ₹2 Cr |
| Depreciation | ₹25 Cr |
| Net Profit | ₹128 Cr |
🔥 Clean P&L with no red flags
But would be nice if they started sharing the wealth via dividend
🏁 10. Peer Comparison – Pharma Street Fight
| Company | P/E | ROE | OPM | Mcap (₹ Cr) |
|---|---|---|---|---|
| Sun Pharma | 34.8x | 17% | 28.7% | ₹3.9L Cr |
| Cipla | 23.2x | 17.8% | 25.8% | ₹1.2L Cr |
| Zydus | 21.0x | 21.3% | 30.3% | ₹97,901 Cr |
| Mankind | 52.9x | 16.8% | 24.7% | ₹1.04L Cr |
| Innova | 38.6x | 14.3% | 15% | ₹4,962 Cr |
⛔ High P/E without matching margins/scale = vulnerable to derating
📌 11. Misc – Shareholding, Promoters, Drama?
- 🧑💼 Promoter Holding: 50.90%
- 🏦 FII Stake: Just 0.35% (falling every quarter)
- 📈 Public Shareholding: Up from 26% → 29%
- 🧑💼 CEO: Mr. Deepak Jain
- 🏢 9 manufacturing facilities (incl. new units from Sharon)
- 👥 40,000+ shareholders — post-IPO retail crowd is big
⚖️ 12. EduInvesting Verdict™
Innova Captab is no scam, no fluff. It’s a legit, growing pharma company with solid CDMO contracts, capacity expansion, and consistent profits.
But:
- Capex-heavy
- Inventory-stuffed
- Return ratios falling
- No dividend
- High P/E without strong moat
Unless B2C and exports scale fast, this could end up as a steady plodder priced like a hyper-growth story.
🎯 Fair Value Range = ₹500 – ₹750
(Based on adj. P/E 20–25x on ₹128 Cr PAT)
CMP = ₹867 → Valuation ahead of fundamentals
✍️ Written by Prashant | 📅 July 11, 2025
Tags: Innova Captab, pharma stocks, CDMO India, IPO 2023, pharma valuation, EduInvesting, ROCE analysis, smallcap pharma India
