Innova Captab’s IPO heats up on Day 3, surpassing subscriptions for all investor categories.
The pharmaceutical company’s initial public offering (IPO) continued to see strong demand from investors on the third day of bidding, with subscriptions now exceeding the offer size by over 10 times. By 1.15 pm, bids had poured in for more than 10 crore shares, compared to the 9 crore shares being offered.
This surge in interest represents a significant increase from the first two days of the IPO. On Day 1, the issue was subscribed at 1.41 times, and by Day 2, it had reached 3.65 times. The final day of bidding is today, December 26th.
Innova Captab is looking to raise a total of Rs 570 crore through the IPO, via a combination of fresh issuance and an offer for sale (OFS). The price band has been set at Rs 426-448 per share.
Strong interest across all investor categories:
- Retail investors: The portion reserved for retail investors was subscribed 11.43 times, demonstrating significant public interest in the company.
- Non-institutional investors (NIIs): This category also showed strong support, with the NII portion booked 24.43 times.
- Qualified institutional bidders (QIBs): While QIBs were the least enthusiastic, their portion was still subscribed at 1.48 times.
About Innova Captab:
Founded in 2005, Innova Captab is a pharmaceutical company with three main business segments:
- Contract development and manufacturing services (CDMO) for Indian pharmaceutical companies.
- Branded generics for the domestic market.
- Branded generics for international markets.
The company boasts a diverse product portfolio including tablets, capsules, injectables, and various liquid medicines. They have produced and sold over 600 different types of generic drugs in the past year and exported their products to over 20 countries.
Grey market signals suggest potential upside:
While the premium in the unofficial grey market has come down from its pre-IPO levels, it still sits at around Rs 90, indicating a potential 20% gain for investors after listing.
This strong investor interest bodes well for Innova Captab’s IPO, and the final subscription numbers are expected to be even higher once bidding closes today.
Digging Deeper into Innova Captab:
1. Business Model Innova Captab :
Innova Captab is a Contract Development and Manufacturing Organization (CDMO) operating in the pharmaceutical space. They don’t develop their own drugs, but instead, partner with pharma companies to manufacture and develop their drugs under contract. Their services include:
- Formulation development: Designing the drug’s form (tablet, capsule, etc.) and delivery system.
- Clinical trial manufacturing: Producing drugs for clinical trials to test safety and efficacy.
- Commercial manufacturing: Large-scale production of approved drugs for market.
- Regulatory support: Assisting with regulatory filings and approvals.
This “asset-light” model allows Innova Captab to capitalize on the booming global pharma market without the heavy costs of research and development.
2. Financials:
Innova Captab is a relatively young company, so its financial history is limited. However, some key points to consider:
- Revenue: Growing steadily, reaching Rs. 274 crore in FY23.
- Profitability: Still unprofitable, with a net loss of Rs. 35 crore in FY23.
- Valuation: At the upper price band of Rs. 448, the P/E ratio is around 31.64, considered high compared to some industry peers.
Investors should focus on future growth prospects and potential profitability when evaluating the company’s financials.
3. Competitors:
Innova Captab faces competition from large established players like Glenmark Life Sciences and Zydus Cadila, as well as smaller regional CDMOs. Each competitor has its own strengths and weaknesses, and Innova Captab will need to differentiate itself through its expertise, customer service, and cost-effectiveness.
4. Growth Prospects:
The Indian CDMO market is projected to reach USD 15 billion by 2025, driven by factors like:
- Rising demand for affordable generic drugs.
- Increased R&D spending by global pharma companies.
- Government initiatives promoting domestic manufacturing.
Innova Captab is well-positioned to capitalize on this growth, but achieving significant market share will require aggressive expansion and strategic partnerships.
5. IPO Terms and Conditions:
- Issue Size: Rs. 570 crore, with Rs. 320 crore fresh issue and Rs. 250 crore offer-for-sale (OFS).
- Price Band: Rs. 426 – Rs. 448 per share.
- Lot Size: 33 shares.
- Listing Date: Expected on December 29th, 2023, on NSE and BSE.
Investors should carefully review the complete IPO prospectus for detailed information on lock-in periods, risk factors, and other relevant terms.
By understanding these key aspects of Innova Captab’s business, financials, competition, and market prospects, you can make a more informed decision about whether or not to participate in the IPO. Remember, thorough research and analysis are crucial before investing in any IPO, including this one.
Disclaimer: This blog article is for informational purposes only and should not be construed as investment advice. Please consult with a financial advisor before making any investment decisions.