Innova Captab Limited — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Innova Captab delivered a robust Q2 and H1 FY26, with consolidated revenue growing 19.5% YoY despite declining API prices. Both CDMO and Branded Generics segments showed strong growth, driven by market expansion and product portfolio. The company maintained EBITDA margins around 15% and is optimistic about sustaining growth momentum, supported by a strong order book and operational efficiencies. The Jammu facility is ramping up, contributing to future growth, though the recent GST rate reduction will necessitate higher sales volumes to achieve full incentives.

Highlights

  • Consolidated revenue grew 19.5% YoY to INR380.4 crores in Q2 FY26 and INR731.9 crores in H1 FY26.

  • EBITDA increased 8% YoY to INR56.1 crores in Q2 FY26 and 17% YoY to INR112.6 crores in H1 FY26.

  • EBITDA margin stood at 14.7% in Q2 FY26 and 15.4% in H1 FY26, aligning with estimated levels.

  • CDMO business revenue grew 15% YoY to INR265.7 crores in Q2 FY26, reaching INR515.2 crores in H1 FY26.

  • Branded Generics business recorded stellar growth of 31% YoY to INR114.6 crores in Q2 FY26 and 43% YoY to INR216.7 crores in H1 FY26.

  • Jammu facility is projected to achieve peak revenue of north of INR1,400 crores at 65-70% capacity utilization over 3-4 years.

  • Manufacturing capabilities strengthened with successful UK-MHRA inspection of Cephalosporin plant and SMDC inspection of Jammu facility.

Key financials

  1. Revenue ₹380.4 Cr +19.5%YoY
  2. EBITDA ₹56.1 Cr +8%YoY
  3. EBITDA Margin 14.7%
  4. PAT ₹29.7 Cr
  5. PAT Margin 8%

What they filed

Q1 FY27: revenue up 33.8%, net profit up 41.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue318 316 315 352 380 +19%450 +42%448 +42%471 +34%
EBITDA50 47 48 52 52 +4%69 +47%65 +35%73 +40%
Net profit35 34 30 31 30 −14%42 +24%38 +27%44 +42%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue (Q2 FY26)
₹380.3 Cr Total
  • CDMO Business ₹265.7 Cr 69.9%
  • Branded Generics Business ₹114.6 Cr 30.1%

Guidance & targets

Revenue

  • Overall Top Line Growth Revenue · next 3-4 years · High confidence 20% plus
    So from -- if you see our past history, we have always doubled our top line in 3 to 4 year's time. So that translates into a 20% plus growth trajectory.

    — Vinay Lohariwala, Managing Director

  • Overall Top Line Revenue · next 3 years · High confidence double

    From INR1,000 to INR1,200 crores today

    So let's say, if you see the post IPO, our level was INR1,000 to INR1,200 crores. So in the next 3 years, our target is to double our top line and vis-a-vis EBITDA and PAT.

    — Vinay Lohariwala, Managing Director

  • Jammu Facility Revenue Revenue · 3- to 4-year plan · High confidence INR1,000 crores plus
    So let's say, this is the ramp-up plan is like 3- to 4-year plan that we should reach in 3 years, INR1,000 crores plus, right?

    — Vinay Lohariwala, Managing Director

  • Jammu Facility H2 FY26 Sales Revenue · H2 FY26 · Medium confidence INR270-280 crores

    Previously INR400 crores → INR270-280 crores

    But let us correct our guidance from INR400 crores to let's say, INR280 crores, INR270 crores.

    — Vinay Lohariwala, Managing Director

Capacity

  • Jammu Facility Peak Revenue Capacity · 4 to 5 years · High confidence north of INR1,400 crores
    And at it's peak level, if I talk about optimum capacity level, so we are expecting an optimum capacity level of, say, 65% to 70%, we should be getting a revenue of north of INR1,400 crores from Jammu facility.

    — Lokesh Bhasin, Chief Financial Officer

Profitability

  • EBITDA Margin Profitability · ongoing · High confidence around 15%
    EBITDA margin remained within our estimated level of around 15%.

    — Vinay Lohariwala, Managing Director

  • EBITDA Margin Profitability · long term · High confidence 15%
    So still, we are optimistic that in long term, our 15% margin should sustain.

    — Vinay Lohariwala, Managing Director

  • EBITDA Margin Profitability · ongoing · Medium confidence 13% to 17%
    So let's say in B2B business, we have seen from a long trajectory that margin our stabilized somewhere between 13% to 17%.

    — Vinay Lohariwala, Managing Director

Working Capital

  • Working Capital Days Working Capital · once sales improve · Medium confidence 85-90
    Once the sale will be on the improved number, the days will be normalized. Okay. Okay. So essentially, it can come back to 85, 90? Normal level, Yes.

    — Vinay Lohariwala, Managing Director

Risks & concerns

  • GST rate reduction on pharmaceutical formulations

    medium

    GST rate reduced from 12% to 5% for pharmaceutical formulations, requiring higher annual sales (INR1,400 crores vs INR650 crores) to achieve the same quantum of incentive from the Jammu facility.

    Management acknowledged

  • API price volatility and decline

    medium

    Declining API prices directly impact the CDMO business, though management notes early signs of price stabilization and bottoming out of the trend.

    Management acknowledged

  • Increased regulatory compliance pressure and longer approval timelines

    medium

    Analysts raised concerns about increased compliance pressure from domestic regulators (e.g., Schedule M) potentially leading to longer approval timelines for products and facilities. Management acknowledged the trend of increasing stringency but did not specify any direct impact on their timelines.

    Analyst acknowledged

Areas of evasion (1)

  • specific delays or longer approval timelines from Indian regulators

Q&A highlights

2 direct
Impact of GST rate reduction on Jammu facility benefits and pricing strategy Direct
So in our Pharmaceutical Formulation business that rate has been reduced from 12% to 5%. So as you know that in Jammu, we have a direct benefit of GST incentive. So let's say, we have the 12% GST incentive and subject to a maximum incentive of approx INR75 crores, INR80 crores. So now our benefit will reduce from 12% to 5%. Whereas the overall quantum of the GST benefit will remain the same. So earlier, let's say, if we need to do annual sale of INR650 crores to achieve the complete incentive. Now it will be approximately, let's say, INR1,400 crores.

This question clarifies the financial implications of a significant policy change (GST rate reduction) on the Jammu facility's tax benefits and how the company plans to manage this impact through pricing and increased sales volume.

Asked by Sudarshan Padmanabhan, ASK NDPMS

Jammu facility's growth trajectory, peak revenue potential, and associated capex Direct
So we have -- Rajesh, we have invested a total amount of around INR480- plus crores in Jammu. And at it's peak level, if I talk about optimum capacity level, so we are expecting an optimum capacity level of, say, 65% to 70%, we should be getting a revenue of north of INR1,400 crores from Jammu facility.

This question provides crucial details on the long-term revenue potential and investment made in the key Jammu facility, which is a significant growth driver for the company, giving investors a clearer picture of future capacity and financial contribution.

Asked by Gautam Rajesh, Everflow Partners

Increased compliance pressure from domestic regulators and its impact on approval timelines Partial
So sir, let's say, sir, with the time line, every regulatory agency is getting stringent whether it's our CDSCO or international guideline even across the vertical, if you see with time, every regulator and industry gets mature, and that's why we call it cGMP, the C is for the current. So the GMP process gets mature, regulator or industry understanding get mature and with time that gets stringent and stringent. And we see the challenge and opportunity both in all these regulatory updates. But those companies who are complying with the standards and put theirs elves ahead of the curve, will see a bright and better future.

This question addresses a critical industry-wide concern regarding increased regulatory scrutiny and its potential to delay product approvals or capacity ramp-ups. While management acknowledges the trend, they avoid giving specific details on actual delays experienced by the company, which could be a watch item for investors.

Asked by Saket, Sagari Capital

3 min read 6 chapters

Detailed narrative

Robust Q2 & H1 FY26 Financial Performance

Innova Captab demonstrated strong financial performance in Q2 and H1 FY26. Consolidated revenue for Q2 FY26 reached INR380.4 crores, marking a 19.5% year-on-year growth. For the first half of FY26, the top line stood at INR731.9 crores, also growing by 19.5%. EBITDA for Q2 FY26 was INR56.1 crores, an 8% increase YoY, while H1 FY26 EBITDA grew 17% to INR112.6 crores. The company maintained healthy EBITDA margins of 14.7% in Q2 and 15.4% in H1, with PAT at INR29.7 crores and INR60.7 crores respectively.

Segmental Growth Driven by CDMO and Branded Generics

Both core business segments contributed significantly to the overall growth. The CDMO (Contract Development and Manufacturing Organization) operations, serving over 300 clients globally, reported a 15% YoY growth in Q2 FY26, achieving INR265.7 crores in revenue. For H1 FY26, CDMO revenue totaled INR515.2 crores. The Branded Generics business exhibited even stronger growth, with a 31% YoY increase to INR114.6 crores in Q2 FY26 and a 43% YoY growth to INR216.7 crores in H1 FY26, driven by product basket expansion and enhanced marketing efforts.

Jammu Facility: A Key Growth Engine and Capacity Expansion

The newly commissioned Jammu facility is a strategic asset for future growth. Innova Captab has invested approximately INR480 crores in this facility. Management projects that at an optimum capacity utilization of 65-70%, the Jammu plant can achieve peak revenue of north of INR1,400 crores. The ramp-up plan for the facility is set for 3-4 years, aiming to reach over INR1,000 crores in revenue. For H2 FY26, the company expects Jammu sales to reach INR270-280 crores, a revision from the earlier INR400 crores target.

Impact of GST Rate Reduction and Mitigation Strategy

The central government's reduction of the GST rate on pharmaceutical formulations from 12% to 5% directly impacts the GST incentive received from the Jammu facility. While the overall quantum of the INR75-80 crores maximum incentive remains the same, the company will now need to achieve annual sales of approximately INR1,400 crores (up from INR650 crores) to realize the full benefit. Management indicated that the 7% reduction would not directly hit the P&L, as pricing strategies with B2B customers would be redefined to account for the reduced advantage.

Regulatory Compliance and Market Dynamics

Innova Captab's manufacturing capabilities were strengthened by successful inspections from the UK-MHRA for its Cephalosporin plant in Baddi and the State Service of Ukraine on Medicine and Drug Control (SMDC) for its Jammu facility. Management acknowledged the increasing stringency of regulatory agencies globally, including CDSCO, emphasizing the company's proactive approach to compliance. Despite a challenging backdrop of declining API prices impacting the CDMO business, early signs of price stabilization are now being observed, which is a positive indicator for future quarters.

Outlook and Margin Sustainability

The company remains optimistic about sustaining its growth momentum, supported by a strong order book. Management reiterated its commitment to maintaining a 20% plus growth trajectory, aiming to double its top line, EBITDA, and PAT within the next three years from its post-IPO base of INR1,000-1,200 crores. EBITDA margins are expected to remain stable within the 13-17% range, with a long-term target of 15% sustainability, even considering the GST changes, as unit efficiencies improve.

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