Innova Captab Q1 FY27 earnings call

Innova Captab Limited commenced FY27 with robust performance, reporting a 34% year-on-year revenue growth to INR470.9 crores and a 33% increase in EBITDA to INR75.1 crores. The company achieved a 16% EBITDA margin and a 42% year-on-year growth in Profit After Tax, reaching INR44.1 crores. This strong start aligns with the company's guidance for 20% revenue growth and profitability outpacing revenue for FY27.

The Contract Development and Manufacturing Organization (CDMO) business was a significant contributor, reporting revenue of INR328.7 crores, reflecting a 32% year-on-year growth. This growth was fueled by steady order flows, an expanding product portfolio, and deeper engagement with both existing and new customers. The company continues to invest in product development and complex dosage capabilities to strengthen its position as a trusted CDMO partner.

Innova Captab's branded generic business maintained healthy momentum, with revenue reaching INR142.2 crores, a 39% year-on-year growth. The strategic focus remains on strengthening presence in existing markets and gradually expanding into newer domestic and international geographies. The company aims to broaden its product offering and deepen market penetration, leveraging its integrated manufacturing and product development capabilities.

The newly commissioned Jammu facility has started ramping up, contributing approximately INR107 crores in revenue this quarter, up from INR90 crores last quarter. Notably, the Jammu plant achieved a positive EBITDA of INR1-1.5 crores in Q1 FY27. Management expects the plant to reach an optimum revenue of INR1,400 crores at 65-70% utilization, with an asset turn north of 3x, and anticipates further ramp-up from Q2 onwards due to seasonal factors.

The company reported an overall EBITDA margin of 16% for Q1 FY27. While gross margins experienced a slight year-on-year dip of 1-1.5% due to business mix, the full-year overall EBITDA margin is expected to be maintained in the range of 15-16% plus-minus 2%. R&D spends are consistently maintained between 0.7% to 1% of total revenue, supporting continuous new product development and capability expansion.

Innova Captab's capital allocation strategy focuses on disciplined investments. General maintenance capex is projected at INR20-25 crores, with growth capex for existing capability augmentation and debottlenecking estimated at INR20-30 crores. The company is also working to firm up plans for its new Baddi plot and will inform the market about any greenfield project expansions as they materialize. The cash conversion cycle is targeted at 90 days, plus-minus 10 days, for the entire group.

The company's strategic priorities include improving capacity utilization, expanding capabilities in complex dosage forms, strengthening R&D platforms, deepening customer relationships, and expanding branded generic presence. Management is confident in achieving 20% plus volume growth and believes the diversified business model, disciplined execution, and sustained customer traction will ensure sustainable momentum. They also confirmed that their pricing model allows for passing through API price increases to customers.