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Jammu to double revenue by FY27

We recently visited Innova Captab’s (INNOVACA) newly commissioned Jammu facility and interacted with the management on Jammu’s growth trajectory, future drivers and outlook. The company’s Jammu facility is spread across 11 acres and has four blocks – three dedicated to Anti-biotics and one general block. With commercialisation of Jammu, the company can now produce Penicillins, Penums, Large volume parenterals and respiratory respules. INNOVACA has increased its cephalosporin (ceph.) capacity. This will enable the company to increase its market share (5-6% now, in our view) in Oral ceph. and incrementally cater to export markets as domestic production shifts from Baddi (EU-GMP certified) to Jammu. The management believe that Jammu can deliver a topline of INR 4-5bn in FY26 and can ramp-up to INR 14-16bn at optimal utilisation. The Jammu facility ramp-up will facilitate a Revenue/EBITDA/PAT CAGR of 34%/39%/41% over FY25-27. With a 20%+ ROIC, moderate working capital needs, strong OCF-to-EBITDA ratio and robust growth profile. We keep our estimates unchanged for the company and value the company at 25x Mar’27 EPS to derive a TP of INR 1,120.

* Details about the plant: The Jammu facility is spread across 11 acres and consists of 4 blocks viz. Cephalosporin (Ceph.), Penicillin, Penum and General block. The company strengthens and increases its capacity and offering from this facility. The plant adds LVP (Large Volume Parenterals) and Respules capability and has an installed capacity of 562mn for the dosage form. Additionally, the facility has an installed capacity of 10.7bn tablets, 1.4bn capsules, 547mn Dry Powder Injections and 311mn for Dry Syrup dosage form. At present, the facility employees 700 people, these include locals and people recruited from as far as Sikkim for specific skill sets. The management plans to shift some production for domestic business for ceph. from the Baddi facility to Jammu and plan to utilise the Baddi facility for Export markets.

* Ceph. block: This block expands INNOVACA’s capacity across ceph. products. The block has capability of producing OSDs, Dry Powder Injection (DPI) and Dry Syrup;

* Penum block: INNOVACA has added penum capability from the operationalization of this block which can manufacture OSDs and DPIs;

* Penicillin/Beta Lactam block: This is a new capability for the company and offers OSD, DPI and Dry syrup dosage forms;

* General Block: This block can manufacture Liquid injection/ Respules, LVP and DPI;

* Topline of INR 7.5bn by FY27: The Jammu facility increases INNOVACA’s ability to offer additional dosage forms and an increased capacity in order to gain wallet share of its customers. The company has invested INR 4.75bn in this plant and expect a revenue of INR 14-16bn at optimal utilisation. Each block will roughly contribute equally once operations are stablised. We build revenue of INR 300mn/4.2bn/7.5bn in FY25/26/27 with margins growing to 18.5% in FY27.

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SEBI Registration Number is INM000010361