Innova Captab ( new listing ) –

Company overview and Q3 FY 24 performance –

Company operates in 4 business segments –

Contract manufacturer for domestic formulators

Branded domestic formulations

Branded international formulations

Sharon Bio business ( acquired last yr )

Manufacturing base –

02 plants at Baddi – both for formulations. Capable of making – capsules, tablets, ointments, dry powder injections, dry syrups, liquid orals. Overall capacity utilisation @ 50 pc

01 plant at Dehradun – acquired with Sharon Bio – its a formulations facility – can produce tablets and capsules.

01 plant at Taloja – acquired with Sharon Bio – Its an API manufacturing facility. Combined capacity utilisation at 50 pc for Taloja + Dehradun plants

01 Greenfield multipurpose plant is under construction at Jammu. Company is spending 350 cr for the same. Expected to go live in H1 FY 25. Full capacities to ramp up over a period of 2-3 yrs. Its a formulations plant mainly focussed on – Cephalosporins, Penicillin, Carbapenems product families. To make dosage forms like – tablets, capsules, dry powder injectables, dry syrup and respiratory respules

01 R&D facility at Baddi. Setting up another facility in Panchkula

14 out of top 15 Indian Pharma companies are Innova’s clients

FY 23 – segment wise business breakup –

Contract manufacturing – 680 cr
Domestic branded formulations – 166 cr
International branded formulations – 81 cr
Sharon Bio – 192 cr

Q3 FY 24 performance ( includes the benefits of Sharon Bio’s consolidation ) –

Revenues – 302 vs 242 cr, up 25 pc
EBITDA – 47 vs 37 cr, up 27 pc
PAT – 25 vs 19 cr ( up 28 pc )

Q3 FY 24 Concall highlights –

Company is the third largest contract manufacturer of formulations in India

Acquisition of Sharon Bio has given company an entry into regulated mkts like Canada, UK, Australia, EU

9M revenues of contract manufacturing services in FY 24 has been flat in FY 24. This is because of price deflation in API prices that the company had to pass to its clients

Sharon Bio is currently doing an avg annual revenue run rate of 180 odd cr. Without any further capex, Sharon Bio’s facilities can generate another 90-100 cr of annual sales which can increase further with not so capital intensive de-bottlenecking exercise

A large chunk of money raised via IPO has been used for debt repayment. It ll lead of annual interest savings of aprox 20 cr. The only debt that the company is now carrying is 235 cr for Jammu project. Company is eligible to receive interest rate subvention on the same from the Govt of J&K. Effective interest rate on this loan is as low as 2.5 pc

The Jammu facility is expected to be commercialised towards the end of Q1 FY 25. Expect good ramp up from that facility only by Q3 FY 25

Jammu facility has a peak revenue potential of > 1500 cr / yr. Likely to be achieved within 5 yrs. Expect to do > 300 cr sales from this plant in FY 26

Expect the company level margins to improve going forward as the capacity utilisation from existing facilities improve. The Jammu facility is eligible for GST refunds from the Govt. That should also help the blended margins when Jammu facility starts contributing meaningfully

As the regulations fro Govt wrt Quality controls, good manufacturing practises keep tightening, its advantage organised / large contract manufacturers like Innova Captab

Disc: not holding, not SEBI registered, may buy in future ( on dips )

Innova Captab ( new listing ) –

Company overview and Q3 FY 24 performance –

Company operates in 4 business segments –

Contract manufacturer for domestic formulators

Branded domestic formulations

Branded international formulations

Sharon Bio business ( acquired last yr )

Manufacturing base –

02 plants at Baddi – both for formulations. Capable of making – capsules, tablets, ointments, dry powder injections, dry syrups, liquid orals. Overall capacity utilisation @ 50 pc

01 plant at Dehradun – acquired with Sharon Bio – its a formulations facility – can produce tablets and capsules.

01 plant at Taloja – acquired with Sharon Bio – Its an API manufacturing facility. Combined capacity utilisation at 50 pc for Taloja + Dehradun plants

01 Greenfield multipurpose plant is under construction at Jammu. Company is spending 350 cr for the same. Expected to go live in H1 FY 25. Full capacities to ramp up over a period of 2-3 yrs. Its a formulations plant mainly focussed on – Cephalosporins, Penicillin, Carbapenems product families. To make dosage forms like – tablets, capsules, dry powder injectables, dry syrup and respiratory respules

01 R&D facility at Baddi. Setting up another facility in Panchkula

14 out of top 15 Indian Pharma companies are Innova’s clients

FY 23 – segment wise business breakup –

Contract manufacturing – 680 cr
Domestic branded formulations – 166 cr
International branded formulations – 81 cr
Sharon Bio – 192 cr

Q3 FY 24 performance ( includes the benefits of Sharon Bio’s consolidation ) –

Revenues – 302 vs 242 cr, up 25 pc
EBITDA – 47 vs 37 cr, up 27 pc
PAT – 25 vs 19 cr ( up 28 pc )

Q3 FY 24 Concall highlights –

Company is the third largest contract manufacturer of formulations in India

Acquisition of Sharon Bio has given company an entry into regulated mkts like Canada, UK, Australia, EU

9M revenues of contract manufacturing services in FY 24 has been flat in FY 24. This is because of price deflation in API prices that the company had to pass to its clients

Sharon Bio is currently doing an avg annual revenue run rate of 180 odd cr. Without any further capex, Sharon Bio’s facilities can generate another 90-100 cr of annual sales which can increase further with not so capital intensive de-bottlenecking exercise

A large chunk of money raised via IPO has been used for debt repayment. It ll lead of annual interest savings of aprox 20 cr. The only debt that the company is now carrying is 235 cr for Jammu project. Company is eligible to receive interest rate subvention on the same from the Govt of J&K. Effective interest rate on this loan is as low as 2.5 pc

The Jammu facility is expected to be commercialised towards the end of Q1 FY 25. Expect good ramp up from that facility only by Q3 FY 25

Jammu facility has a peak revenue potential of > 1500 cr / yr. Likely to be achieved within 5 yrs. Expect to do > 300 cr sales from this plant in FY 26

Expect the company level margins to improve going forward as the capacity utilisation from existing facilities improve. The Jammu facility is eligible for GST refunds from the Govt. That should also help the blended margins when Jammu facility starts contributing meaningfully

As the regulations fro Govt wrt Quality controls, good manufacturing practises keep tightening, its advantage organised / large contract manufacturers like Innova Captab

Disc: not holding, not SEBI registered, may buy in future ( on dips )

Thanks. Just curious to know which out of these you plan for 6 months? I too hold 7 out of these. Thanks.

REC funds EV -Buses apart from Solar, Green hydrogen. Plans to fund Green Ammonia which has huge potential in overseas market apart from domestic demand.

REC has already funded 10,000 EV’s during Fy2024. They plan to fund 50,000 EV’s during next 2-3 years. There Is going to be huge demand from State Govt undertaking such as STU’s who are replacing existing and ailing Diesel bus fleet.

REC Ltd’s disbursal towards green hydrogen projects in FY24 stood at Rs 7997 crore from nil disbursements made in FY23.

The company’s funding in the solar energy space has more than doubled to Rs 20,956 crore in FY24 from Rs 9031 crore in FY23.

REC predicts that prices of green hydrogen which are close to USD 5-6 are likely to come down to USD 1 by 2026-27, on the same line as solar, which was costing Rs 16 per kWh, a few years back to current discovered prices of Rs 2.5 to 3 per Kwh with more players entering the space.

REC plans to support funding for producing green ammonia, which is in high demand in Western European countries such as Germany, the United Kingdom, and France.

Disclaimer : Invested from lower level for long term. I may be biased. it is not a buy or sell recommendation.
Please do your own assessment before investing. NBFC’s do carry risk of NPA and PSU,’s in particular are subject to frequent policy changes by Govt.