Innova Captab files DRHP for IPO

30 Jun 2022 , 08:04 AM

The Securities and Exchange Board of India (SEBI), the market regulator, has received the Draft Red Herring Prospectus (DRHP) from Innova Captab. The company is an integrated pharmaceutical company in India with a presence across the pharmaceuticals value chain, including research and development, manufacturing, drug distribution and marketing, and exports.

The issue includes offer-for-sale (OFS) of up to 9,600,000 equity shares by the promoter and selling shareholders, which includes up to 3,200,000 shares by Manoj Kumar Lohariwala, up to 3,200,000 by Vinay Kumar Lohariwala (promoter selling shareholders), and up to 3,200,000 by Gian Parkash Aggarwal (other selling shareholders). The issue has a face value of Rs10 per equity share. The fresh issue of equity shares will be of  up to Rs 400 crore.

According to media reports, the IPO might bring in anywhere between Rs 700 and Rs 900 crore.

The offer is being made through the book-building process, wherein not less than 15% of the offer must be made available to non-institutional bidders, not less than 35% of the offer must be made available to retail individual bidders, and not more than 50% of the offer must be allocated to qualified institutional buyers.

The business may explore a private placement, preferential issue of equity shares, or any other mechanism aggregating up to Rs 80 crore in conjunction with the lead bankers to the issue. If such a placement is successful, the size of the new issue will be decreased.

The repayment and/or prepayment, in part or in full, of some outstanding loans; the investment of Rs 29.50 crore in the subsidiary, UML; the funding of Rs 90 crore for working capital requirements; and general corporate purposes will all be covered by the proceeds from its new issuance.

In terms of operational revenue, the Haryana-based pharmaceutical company was the second-largest formulation contract development and manufacturing organization (“CDMO”) in India in Fiscal 2021. It had the third-fastest growth rate in the category from Fiscal 2019 to Fiscal 2021. In addition to domestic branded generics and an international branded generics business, it also has a contract development and production operation that offers manufacturing services to Indian pharmaceutical businesses.

In the domestic formulation industry, fourteen of the top fifteen Indian pharmaceutical companies are its clients, according to a CRISIL study that was cited in the DRHP. It had 164 CDMO clients for the nine months that concluded on December 31, 2021.

With a vast network of over 96,000 retail pharmacies and more than 3,400 distributors and stockists, Innova Captab has a varied generics product portfolio and manufactures more than 400 products, which it sells under its own brands in the Indian market and exports to 17 other nations.

On the back of strong growth sustained by the global pharmaceutical industry and an increase in India’s export potential, the Indian CDMO market grew at a CAGR of 14% from fiscal 2016 to fiscal 2020, and is anticipated to maintain this level of growth in the following five years from fiscal 2021 to fiscal 2026. It is predicted that the Indian CDMO market (including domestic and exports) will grow at a CAGR of approximately 14 to 16% from Rs1.01 trillion in fiscal 2021 to Rs 2.0 to 2.05 trillion.

According to the DRHP, the book running lead managers for the offer are ICICI Securities Limited and JM Financial Limited, while KFin Technologies Limited is the registrar. It is proposed that the equity shares list on both the BSE and NSE.