Innova Captab Limited (INNOVACAP.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Innova Captab Limited Q3, 9M FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Mr. Ayush Kumar Garg, Head IR. Thank you, and over to you, sir.

Thank you, Pari. Good afternoon, everyone, and thank you for joining us on our earnings call today to review the operational and financial performance for Q3 and 9 months FY '26. We have with us Mr. Vinay Lohariwala, Managing Director; Mr. Lokesh Bhasin, Chief Financial Officer; and representatives from SGA, our Investor Relations adviser. I trust you had the opportunity to review our financial results and the investor presentation, both of which are available on our website as well as on the stock exchange website. Should you have any further questions after this call, our Investor Relations team will be happy to assist you. With that, I'll now hand over the call to Mr. Vinay for his opening remarks. Thank you, and over to you, sir.

Thank you, Ayush. Good afternoon, everyone, and thank you for joining us on our earnings call today. I am thrilled to report that Innova Captab delivered a stellar quarter with revenue from operations surging to INR 450 crores with a robust 42% year-on-year growth. This reflects not just numbers, but the tangible result of our sharpened strategic focus, comprehensive product pipeline and unwavering operational discipline. For 9 months FY '26, revenue from operations hit INR 1,182 crores, up 27% year-on-year, powered by exceptional execution across both business verticals and our world-class manufacturing infrastructure that continue to set us apart from competitive landscape. Profitability advanced hand-in-hand with scale, driven by operational efficiency and streamlined operations that unlock greater value at every step. This reflects our team's disciplined execution and relentless focus on optimizing resource to deliver sustainable margin and robust growth. Coming to business highlights. Our CDMO business powered ahead 29% year-on-year, fueled by deeper partnership with trusted existing clients and existing wins from new ones. These relationships are built on our proven reliability and technical expertise, positioning us on a go-to partner for quality pharmaceutical formulation. The API prices are witnessing some stabilization, which directly supports this vertical. Branded Generics surged 79% year-on-year, driven by our bold push into high potential new domestic and international geographies, coupled with intensified penetration in established markets. This growth stems from an elaborated portfolio to high-demand products and agile go-to-market strategies that resonate strongly with prescription and patient alike. Our manufacturing facilities are equipped with state-of-the-art infrastructure and rigorous quality control that ensure seamless and reliable operations. These proven assets form the bedrock of our scale-up supporting both current demand and future growth trajectory with unmatched consistency. Recently, we further bolstered these capabilities with prestigious GMP certification. UK-MHRA approved our cephalosporin Baddi unit and PIC/s via SMDC, Ukraine for all our Jammu blocks. These milestones open doors to regulated high-growth markets where our superior quality standards will deliver premium opportunity and long-term client loyalty. The new Jammu facility is ramping up smoothly with commercial operation underway with marquee CDMO partner. Several others have also successfully completed audits validating stability data and other key parameters. We are optimizing about Jammu facility's operational ramp-up ahead in the coming quarter. Looking ahead, we, at Innova Captab, have put multiple high-impact levers in motion from capacity expansion to geographical diversification, ensuring sustained revenue acceleration and profitability gain. Our team remains fully committed to execute these precisions. Operating in a dynamic environment where innovation and research in the pharmaceutical space are of paramount importance, we are equally focused on meeting the need of the changing environment through our existing as well as planned R&D endeavors, driven strictly by our dedicated R&D center. Our achievement highlights our strategic agility and operational excellence aimed at a dynamic industry backdrop. With a proven track record of being a growth-focused company, we are confident of replicating similar momentum going forward. With this, I look now to hand over the call to our CFO to detail out of the financial performance during the quarter and 9 months FY '26. Over to you, Lokesh.

Thank you, sir. Good afternoon, everyone. I will now walk you through the financial highlights for Q3 and 9 months FY '26. Consolidated revenue reached INR 450.3 crores, delivering robust 42.3% year-on-year growth, driven by strong demand across both CDMO and Branded Generics business areas. For 9 months FY '26, revenue stood at INR 1,182.2 crores with a year-on-year growth of 27.3%, reflecting sustained momentum from our diversified portfolio and expanding market reach. Exports formed a healthy 35% of Q3 FY '26 revenue mix and constituted 32% in 9 months FY '26, underscoring our strategic progress in global markets. The CDMO business generated INR 298.7 crores in Q3 FY '26, up 29% year-on-year from INR 231.6 crores. Our 9 months FY '26 CDMO revenue totaled INR 813.9 crores, growing 18% Y-o-Y. Branded Generics shone brightly with INR 151.6 crores in Q3 revenue, surging 79% year-on-year, fueled by aggressive geographic expansion, both domestic as well as international. For 9 months FY '26, this area delivered INR 368.4 crores, up by 56% year-on-year. EBITDA climbed to INR 71.1 crores in quarter 3 FY '26 from INR 50.9 crores last year, a solid 39.6% year-on-year increase. Nine months FY '26 EBITDA was INR 183.7 crores, up 24.8% from INR 147.1 crores with margin steady at 15.8% for the quarter and 15.5% over 9 months, reflecting disciplined cost management. PAT stood at INR 42.1 crores for quarter 3 FY '26 and INR 102.8 crores for 9 months FY '26, supporting our focus on profitability along with the growth. This wraps up our opening remarks. The floor is now open for your questions. Thanks a lot.

[Operator Instructions] The first question is from the line of Sudarshan from ASK NDPMS.

Congrats on good set of numbers. Sir, my first question is on Jammu, if I can break it into two parts. One is how much in this quarter it's contributing? I mean if you can give some color quarter-on-quarter, how it has scaled up? And second is in the context of the GST cut that happened earlier. I mean, now [ move the strategy B ] to maximize the utilization in Jammu much earlier to what it was, sir, earlier planned to basically capture the higher component of some GST, some color on that.

Yes. So this quarter, we have achieved a revenue of around INR 89 crores from Jammu, which has increased from around INR 60 crores previous quarter. And regarding -- can you please repeat your second question?

This was on account of the reimbursement that happened from the -- on the Jammu facility. Now earlier because of the cut in the GST, the expectation was it was a little hazy, but the way that we can ramp it up faster, we will get better payback, right, on the Jammu facility. So I wanted to know whether now we have a plan with respect to how we are going to cap that.

So as Lokesh has given the number that this quarter, we have closed INR 89 crores. So this is post the implementation of GST 2.0, number one. The number two is that GST is one of the factor behind the Jammu facility. The other is pure play of the capacity and capability demonstration. So definitely, we have some dent on the GST due to the GST cut, but the capability and our capacity and capability is at par and it's a state of facility that the PIC/s certification is already being done. Most of our 14 out of 15 clients where we have the relationship have either they have validated, visited the facility, done their quality assurance audits, we have started the business or we are in the pipeline to start the business either this quarter or the first quarter. So we see there is no what I can say like we have the good fortune for this facility. And I also like to submit one more thing that yet we have not contributed any PAT or EBITDA margin from the Jammu facility. Still the numbers is speaking itself, right? And next year, we are very hopeful that there will be a positive contribution from the Jammu itself.

Sure, sir. And how do you see the scale up here, sir? I mean, in terms of utilization, say, in the next 18 months to 24 months?

So as you know that the pharmaceutical require a full-fledged validation and audits are there. So we have started this Jammu facility in January '25. Now it's almost 1 year from our commercial production start. So now that we are hopeful that all the customers like most of the marquee customers will be on board from this quarter or the first quarter of the next year. And I don't want to quantify the number because being a new facility, there may be some gaps. That's why we don't want -- we are not quantifying the number. But in overall strategy, we can have the 20% plus growth for the next year.

Sure, sir. Sir, my second question is on the Branded Generics, which has again done very well, I mean, Q-on-Q and Y-o-Y. So if you can give some color with respect to, one, the sustainability of that? And how -- is this contributed more by the domestic? Or are you seeing better traction happening from Sharon? So if you can give some color on how the mix is and the outlook on this.

So let's first give the number -- let me take the number from the CFO, let Lokesh give some focus on this.

Yes. So if you see, you are right that Branded Generics has fared well this quarter. This quarter, we have achieved around INR 151.6 crores from Branded Generics, which is showing a growth of around 79%. As I submitted earlier, it has been possible because of our aggressive expansion and focus on our both domestic as well as international business areas. So we have worked on all fronts to work on this growth.

Yes. So in this Branded Generics, we classify our domestic as well as international business where we have our own registered brands. So we are getting a good sustainable traction there. Our trade generics, Univentis is doing good vis-a-vis our Sharon's and our Innova's export business that is in our own brand is being classified in this category.

[Operator Instructions] The next question is from the line of Nishita from Sapphire Capital.

Congratulations on such a good set of numbers. So I just had a few questions. One is on the capacity utilization. So can you let us know about the capacity utilization in all of your plants, if possible?

Yes, Nishita, we lost you for last 5 seconds. Can you please repeat?

Yes. So I just wanted to know the capacity utilization for all of our plants, if it's possible? Current capacity...

Yes. So if we talk about our manufacturing capabilities, as we said, the Jammu has just started. So it is in very nascent stage of ramping up. So there is lots of potential to ramp up over the next few years. And talking about our other facilities, which is our Baddi facilities as well as our formulation facility at Dehradun and Taloja, they range between a capacity utilization of 55% to 60% as of now.

Okay. Okay. And at peak capacity, how much revenue can we expect from all the 3 facilities?

Okay. So if I talk about Jammu, as we have submitted in our earlier calls also, the optimum capacity -- on an optimum capacity of, say, 65% to 75%. Jammu is having a potential to reach around INR 1,400 crores plus when it will reach the optimum capacity level. And see, in a normal CDMO operations, our -- the optimum capacity ranges from 65% to 75% and the same goes with our existing manufacturing facility also. So there is still potential of 15% to 25% to grow in all these existing manufacturing capabilities.

Right, right. Okay. And my next question is on -- so it's a clarification. Sir, you mentioned that we did INR 89 crores of revenue from Jammu facility in Q3. So is that facility breakeven yet? Or how long is it is that facility going to take to breakeven?

Yes. Nishita, it is nearing the breakeven at EBITDA level. And of course, at -- reaching a PAT breakeven, it takes certain quarters also. But we are very much sure that in the next year, as Vinay sir also submitted that in next year, we are very much looking ahead to get a positive contribution from Jammu facility from both EBITDA as well as PAT level.

Okay. Understood. And my next question is, so we like had a very good growth in the past 3 quarters of FY '26. So like do we see us reaching a 30% growth -- overall 30% growth in FY '26?

So full year guidance, we'll still like to refrain from giving as of now.

Okay. Understood. And sir, again, a clarification you mentioned to a previous participant that in FY '27, we expect a 20% growth. That 20% growth is in the Jammu facility specifically or overall 20% growth?

This is overall 20%.

[Operator Instructions] The next question is from the line of Gourav from JM Financial.

Am I audible?

Yes, you're audible.

Yes, sir.

To begin with, I'd like to first congratulate on a good set of numbers. I had a couple of queries. The first, I wanted to understand that the Branded Generics did really well this quarter for us. Was it led by the traction in the international business, the International Branded Generics business?

Yes. So basically, as we said that Branded Generics business growth has been contributed by both domestic as well as international level. And yes, our international geographical presence is increasing as is evident from our overall export to the revenue mix. It has increased around 35% for this quarter and 32% for 9 months ended December '25.

So what was the parallel number for, let's say, 3Q FY '25...

Q3 '25 was around 25%, 27%.

25%, 27%, right? Okay?

Yes.

And sir, in terms of any guidance for the fourth quarter? How should we look at the fourth quarter in terms of...

So as of now, we are very much hopeful depending upon the seasonal cycles. We are still looking at a number, but we would like not to give any comp guidance as of now.

The next question is from the line of Avnish from Vaikarya.

Congrats on a great set of numbers. Lokesh, I just have a question. If you -- you're saying INR 89 crores have come from Jammu and it's nearly breakeven. If I look at the results on an ex Jammu basis and if I remove, let's say, INR 89 crores from the INR 450 crores of revenue that you booked, the ex Jammu revenue of INR 361 crores will give the same EBITDA because Jammu is breakeven. That EBITDA margin comes out to be 19% on an ex Jammu basis. So I just wanted to understand what has happened for the margins on an ex Jammu basis to increase so much?

Thank you, AvnishJi. You catch the right thing. And I covered this in my opening remarks that we are at the EBITDA ex Jammu whatever the EBITDA contribution or PAT contribution is coming is from the ex Jammu. Jammu is not yet participated in EBITDA or PAT margin. Even the PAT margin is negative because of the project cost depreciation and all that, right? So there is a substantial improvement if you see, you calculate the number correctly, there is 18%, 19% EBITDA margin if we see the ex Jammu. So this is overall good performance across the category, better price realization, support from the API and overall the exports, Sharon, our trade generics business, so every one is contributed in a positive manner. Similarly, if you see the ex Jammu number, that is a substantial improvement in that also. So if you see that last quarter, we are somewhere at INR 380 crores. And this quarter, we are at INR 450 crores. So even in the PAT margin, the INR 17 crores sales improved contributed the almost INR 12 crores in the PAT margin. Similarly, when we improve the performance by 10% to 20%, there is a substantial gain in the EBITDA margins. If you see the growth conversion that is approximately 32%, 33% of the -- on average basis, material margin is like 30% to 33%. But once the performance of the business, let's say, optimize and give in a better territory, then it results in a better EBITDA margin because like electricity or workman cost, all are the constant.

Understood.

Yes. From the operational leverage, we are getting the benefit. Better price realization is the second one.

Understood. The second question is on -- if you look at your pure-play CMO business, the third-party business that you have, can you quantify the volume growth that you've seen in this quarter?

Yes. So Avnish, if I say on a year-on-year basis, our volume growth is around 6% to 10%. Rest is all change in product and sales mix. And quarter-on-quarter, there is not much change in volume, but the growth has been contributed mainly due to change in product and sales mix.

Okay. Last question was on the API prices. I think VinayJi mentioned in the opening remarks that you are seeing some stabilization. So if you see on a year-on-year basis, is it safe to assume that the prices have been stable? You have not got any benefit from any API price increase in this quarter. Is that a fair assumption to make?

So year-on-year, if you see then there is a negative on the prices. So what we are saying is a quarter-on-quarter, there is a much more stabilization. Year-on-year, I think there is -- clearcut, we are even losing on the price front.

The next question is from the line of [ Praveen from Avendus Spark Institutional Equity ].

Sir, my question was also...

Praveen, sorry, but -- Praveen, your voice is really muffled. Can you use the main phone instead of speakers if you are...

Is this better now?

Yes, that's better.

So my question is also in the lines of API prices. So now that it has stabilized on a quarter-on-quarter basis, how do we see the prices of API going forward? Like are we considering this as a bottom? Or what is the trend on API prices? Can you give us some idea on this line?

Praveen, this is regarding future trends you are asking for?

No, sir, API prices.

Yes. So in past, we can say that the prices are now in a stable territory if we compare, say, Q2, Q3 on an average basis, we can say it is in stable territory. But prediction about the future is still uncertain. We cannot say what happened in the future.

Correct. Correct. On the export...

Yes. Go ahead.