Q2 25/26

Nov 10, 2025

Summary

Q2 and H1 revenue grew 19.5% YoY, with branded generics leading growth and EBITDA rising 8% and 17%, respectively. Jammu FY26 revenue guidance was cut to ₹270–280 crore after the GST incentive reduction and API price pressure.

Ladies and gentlemen, good day and welcome to the Innova Captab Limited Q2 and H1 FY2026 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note this conference is being recorded. Before we begin, a disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinion and expectations of the company as on date of this call. The statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand this conference over to Mr. Ayush Kumar Garg, Head of IR. Thank you and over to you, sir. Thank you, Mark. Good morning, everyone, and thank you for joining us on our earnings call today to review the operational financial performance for Q2 and H1 FY2026. We have with us Mr. Vinay Kumar Lohariwala, Managing Director, Mr. Lokesh Bhasin, Chief Financial Officer, and representatives from SGA, our investor relations advisor. I trust you've 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 now hand over the call to Mr. Vinay for his opening remarks. Thank you and over to you, sir. Thank you, Ayush. Good morning, everyone, and thank you all for joining us for today's earning call. Innova Captab continued to build on its strong growth trajectory in the second quarter of the financial year, delivering a robust year-on-year growth of 19.5%, both in Q2 and H1 FY2026, reaching INR 380 crores and INR 732 crores respectively. This performance come despite the challenge backdrop of declining API price, which directly impacts our CDMO business. However, we are now seeing early signs of price stabilization. During the quarter, we witnessed healthy volume growth at group level, which is in testament of our expanding market presence and strong customer demand. Briefing on profitability, we achieved year-on-year EBITDA growth of 8% in Q2 FY2026 and of 17% in H1 FY2026. EBITDA margin remained within our estimated level of around 15%. PAT margin were also around 8%. I would also like to bring to your attention to the fact that during this quarter, our manufacturing capabilities were further strengthened with the successful inspection of our cephalosporin plant in Baddi by UK Medicines and Healthcare products Regulatory Agency, that is UK-MHRA, and our Jammu facility by State Service of Ukraine on Medicines and Drugs Control SMDC. These milestones underscore our adherence to global quality standard and reinforce our presence in key international markets. I would like to highlight that we cater to some of the most prominent pharmaceutical companies in India as our CDMO client. Several of these partners have already completed their audit and review data from stability batches, process validation batches, and other key parameters at our newly commissioned Jammu facility. We have already commenced business operation with some of them while discussions with others are at an advanced stage. This provides a strong foundation for scale-up in the near term. Coming to each business area, our CDMO operation, through which we serve our 300 client across the globe, witnessed a year-on-year growth of 15% in Q2 FY26 and 12% in H1 FY26. Despite the temporary pressure from lower API price, this resilience highlighted the strength and the diversity of our client base and product portfolio. The branded generic business, which is our front-end operation with a direct presence across India and key regulated and semi-regulated market globally, continue its strong growth trajectory. This was driven by expansion of our product basket and enhanced market efforts. The business recorded an accelerated year-on-year growth of 31% in Q2 FY26 and 43% in H1 FY26. As we move into the second half of the financial year, we remain optimistic about sustaining our growth momentum. We have a strong order book which will feed growth in the business in the coming months. Further continued operation efficiency at our manufacturing sites and possible stabilization in API price provides a strong foundation for the coming quarter. Our focus will remain on maintaining high service quality, deepening client relationships, and optimizing our cost structure to deliver consistent value creation. With a disciplined approach and a clear roadmap, we believe Innova Captab is well-positioned to deliver sustainable growth and create long-term value for all stakeholders. With this, I now hand over to Mr. Lokesh to detail about the financial performance for this quarter. Thank you, sir, and good morning, everyone. I will now take you through the financial highlights for quarter 2 and H1 FY26. Our consolidated revenue stood at INR 380.4 crores, registering year-on-year growth of 19.5%. For H1 FY26, the consolidated top line was INR 731.9 crores. Exports contributed 30% to the overall revenue mix, both in quarter 2 FY26 and H1 FY26, reflecting a well-diversified geographical presence. CDMO business clocked INR 265.7 crores of revenue as compared to INR 230.6 crores in quarter 2 FY25, thereby registering year-on-year growth of 15%. For H1 FY26, CDMO business revenue totaled to INR 515.2 crores. The growth was propelled by deeper client engagement and expansion of our product portfolio. The branded generic business continued to deliver stellar growth and recorded revenue of INR 114.6 crores with a year-on-year growth of 31%. H1 FY26 revenue from this business cumulated to INR 216.7 crores with a year-on-year growth of 43%. The EBITDA grew to INR 56.1 crores for this quarter vis-à-vis INR 51.9 crores in quarter 2 FY25, thus signifying growth of 8%. For H1 FY26, EBITDA was INR 112.6 crores versus INR 96.2 crores in H1 FY25, growing by 17%. EBITDA margin was 14.7% in quarter 2 FY26 and 15.4% in H1 FY26. Profit after tax for quarter 2 FY26 was INR 29.7 crores and INR 60.7 crores for H1 FY26. With this, we would like to conclude our opening remarks and open the floor for further question and answer. Thank you very much. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sudarshan Padmanabhan from ASK NDP MS. Please go ahead. Yeah, thank you for taking my question. Sir, I understand that there was a GST impact that could have impacted the volume. Second is also that we have this tax benefits coming in, the GST being reimbursed. Can you hear me? Hello? Sir, could you please- Your volume is very low. Can you hear me? Yeah. Could you please come closer to the mic? Yeah, sure. Is it audible? Yes, it's audible. Please go ahead. Yeah. I would like to understand the impact on GST. One, was there any disruption because of the GST in this quarter, I mean, from our client's end? Second is going forward, given that the manufacturing at Jammu gets benefit in terms of GST coming back to us, is there any thought process change? I mean, how are we going ahead with the dialogues with the Jammu government with respect to the GST? Some color on this. Yeah. Thank you, Sudarshan. This quarter, as you all know that the central government has reduced the GST rate to 2 rate structure. In our pharmaceutical formulation business, the rate has been reduced from 12% to 5%. As you know that in Jammu, we have a direct benefit of GST incentive. Let's say we have the 12% GST incentive and subject to a maximum incentive of approximately INR 75-80 crores. Now our benefit will reduce from 12% to 5%, whereas the overall quantum of the GST benefit will remain the same. Earlier, let's say if we need to do annual sale of INR 650 crores to achieve the complete incentive, now it will be approximately, let's say INR 1,400 crores. In short term, yes, definitely we are adversely impacted. But in long term, say post 2 to 3 years' time as this Jammu project is expected to do the revenue, let's say from more than INR 1,000 crores. That time I think the adverse impact will be neutralized. But certainly that 12% reduction to the 5%, it's a straight away 7% benefit has been gone. Sure. There will be about INR 30 crores impact versus what we had initially talked about, that is on the reimbursement side. Even if you're assuming that there is a scale up for the next 2 years, about INR 30-40 crores. Sir, I am not able to hear you clearly. You may need to speak a bit. Sir, suppose 30, 40 or anywhere between 30-50 crores given the kind of scale up that you had in outline in the utilization of Jammu in the next couple of years, just in the next couple of years, post which we will basically catch up. We cannot measure that impact in this way. But certainly that we are going to get, let us say, a 12% reimbursement. Instead of that, we are going to get the 5% reimbursement. This business is basically a total business is B2B. Most of the business is B2B. In that case, let us say, if we are going to pass some percentage point to our customer, that will be reduced. Exactly, we cannot say that the 7% impact will be transferred to the P&L. The pricing will be redefined. Okay, sure. Got that. And sir, with respect to. Let's say- Yes. Let's say, from the other area, if we have the earlier 12% advantage, now the advantage remain as 5%. Sure. Got it. You'll basically reduce the benefit that you're passing on to the client. It's not necessarily that you'll take the entire hit on that side. Yes. Simply, it's like. If you see from the bottom, still we have the 5% benefit. If you see from the top, 7% margin is lose. Sure. Got that, sir. Yes. Sir, vis-à-vis what we had earlier in the charge, we thought that Jammu, we can basically do INR 400 crores from that facility. Given that the first half we have basically reported, if I'm looking at it close to INR 700 odd crores, INR 730 odd crores in terms of sales. The implied sales for the second half seems to be very high. It has to be between INR 450 to INR 500. I understand that there has been a fall in API prices as well. In this context, do you still believe that the INR 400 crores of target is achievable? So let's say, sir, Jammu number is currently for the H1 is somewhere around INR 120 crore. For the H1, we have achieved a number of INR 120 crore. So let's say if we double it is approximately INR 240, INR 250 crore. That is with the API correction like in a potassium clavulanate, somewhere it was INR 18,000, now it is INR 13,000. In few of the API, there is a 15%-20% correction. Still we are on the clear-cut trajectory, professional trajectory of INR 250. Right? We believe that in the next half, we will do better from Jammu also. What we have done in H1. Despite the cut of GST, we are saying that we will do better in Jammu sales in the H2. So it look like a clear-cut trajectory of INR 300 crore, what we can say. If we make like 75-75, then it will be like a INR 270, INR 280 crore. Let us correct our guidance from INR 400 to, let's say, INR 280, INR 270 crore. Sure. And sir, if I'm- Sorry to interrupt longer term. Yeah. Sudarshan, I would request you to kindly rejoin the queue as there are participants. Thank you. The next question is from the line of Gautam Rajesh from Everflow Partners. Please go ahead. Hi, sir. Good morning. Thank you for the opportunity. My first question was on what sort of growth do you expect over the next three to five years? How do we see this growth? That would be my first question, sir. Thank you, Rajesh. If you see our past history, we have always doubled our top line in three to four year time. That translates into a 20% plus growth trajectory. Similarly, post IPO, if you see, we are committed to maintain the same trajectory. Let's say, if you see the post IPO, our level was INR 1,000 to INR 1,200 crore. So in the next three year, our target is to double our top line and vis-à-vis, EBIT and PAT. Similarly, we are committed to that, and we see there is no challenge in that. Understood. Thank you. My next question was on the Jammu facility plant. How do you see the Jammu expansion change our growth trajectory? How much of this growth that you're saying would come from Jammu? How do you see the growth trajectory in Jammu? Also on what CapEx have we done for this facility, and what is the peak revenue we can expect from this? Yes. So, Rajesh, we have invested a total amount of around INR 450 plus crore in Jammu. At peak level, see, if I talk about optimum capacity level, so we are expecting at an optimum capacity level of say 65% to 70%, we should be getting a revenue of north of INR 1,400 crore from Jammu facility. All right. When do we see this happening? Will it take three years? Yes. Let's say, this ramp-up plan is a three to four-year plan that we should reach in three years, INR 1,000 crore plus. That's what we always say, that the 20% plus growth trajectory should be maintained in the coming time. All right. Sir, just on the first question asked, what are the other benefits? In the 5% GST, the only benefit that we get from Jammu facility, are there any other benefits of having the facility over there? Interesting. Basically, what I understood is that you are asking what are the benefits other than GST that we are going to accrue from Jammu plant. Yes. My understanding is 5% now due to the GST, that thing. Is there any other benefit that we have from the Jammu facility? That is right. In addition to GST incentive benefits, we are eligible for an interest subvention benefit on the term loan that we have taken on the plant and machinery for Jammu to the tune of 6% over finance cost. All right. Thank you, sir. That would be it from my end. Thank you. Participants who wish to ask a question may press star and one on their touchtone telephone. The next question is from the line of Saket from Sagari Capital. Please go ahead. Hi, thanks for the opportunity. Am I audible? Yes, sir, you're audible. Yeah. First of all, congrats to the management for excellent numbers as well as strong guidance despite the volatile environment. Sir, the first question would be that you talked about while the prices did seem to erode a bit during the quarter, but volume numbers were strong. Can you help us with what was the volume growth and what was the price decline, sir, on a console basis, especially for the CDMO manufacturing side? Hello, am I audible? Ladies and gentlemen, the line of the management has been disconnected. Please stay connected while I reconnect the management. Sure. This call is no longer being recorded. Ladies and gentlemen, the management line has been connected. Thank you for staying connected. Hello. Hello. Mr. Saket, please repeat your question. Sure. Yeah. Thanks for the opportunity, and again, congratulations to the management for excellent numbers despite volatile environment and also for a strong guidance. My first question would be that you said that the volume growth was excellent despite price erosion. For the domestic CDMO manufacturing side, what was the volume growth and what was the price decline, sir? Saket, it is a complex environment. In our case, there are two factors for the growth. One is, of course, our J&K facility, which is putting a growth number. The other one is the Baddi volume growth. Let's say, Lokesh for the volume growth number. Yes. If you talk about our volume growth on our ex-Jammu basis for our manufacturing facility at Baddi. Overall volumes are negative, but price volume is in the range of 10%-12%, and at the same time, our volume growth was around 8%-10%. Okay. Fantastic. Thanks for this. My next question would be that, you talked about things stabilizing, but you have also been highlighting that anti-infective was the big culprit as far as price erosion goes. The stabilization is now seen across segments or including, say, anti-infectives, this price stabilization. How is the volume picking up, say, for the almost now we are 40%-45% for Q3. Is the volume growth sustaining, sir? Again, I am talking about ex-Jammu. Yes. If you see the API prices, there are few early sign of reversal of the API pricing. Hello? Okay. Can you hear me? Yeah. I heard it. There are early signs of reversal of API price, or we can say the bottom out of the API pricing trend. That is why we speculate that in the near future or the coming financial year, there should not be any further degrade in the prices. But let us say it all depends on the supply, demand, and the capacity availability in the future prices. Even nobody can predict the actual trend. Fair point, sir. Another question that, one of our analysts here stated that there has been increased compliance pressure, especially for the domestic regulators in wake of, again, the Coldrif incidents, as well as the focus on implementing the new Schedule M, as they are saying. So, in your experience, can you highlight if even you are witnessing, say, increased compliance pressure, which is leading to, say, longer approval timelines? So for example, the validation batches or the stability data that was required in the earlier era, could either say X months, today it is 2X or 3X months. So something if you can highlight, because in the long term, it can be really positive, but in the short term, maybe the approvals or, say, capacity ramp-up of our facilities might take slightly longer. If you can share something on this compliance aspect, especially from the domestic regulator side, and any areas where you are seeing more double clicks from the regulators, like more samples or longer approval timelines. So something on that front, sir. So sir, let us say sir, with the timeline, every regulatory agency is getting stringent and stringent, whether it is our CDSCO or international guideline. Even across the vertical, if you see, with time, every regulator and industry gets mature, and that is why we call it cGMP. So C is for the current. So the GMP process gets mature, regulator or industry understanding gets mature, and with time, that gets stringent and stringent. We see the challenge and opportunity both in all these regulatory updates. Those companies who are complying with the standards and put themselves ahead of the curve will see a bright and better future. So our job is to, let us say, understand, read the guideline properly and comply in advance. As a company, that is our focus area, that we should comply in advance with the old regulation, across whether it is pharma or any other thing. We should be ahead in the compliance network so that we can get the advantage and we can do the business peacefully. Got it, sir. Are you seeing any delay or longer approval timelines from the Indian regulators, something that if you have seen in the recent past? That individual comment we do not want to do on any issue. Okay. Yeah. Fantastic. Thanks for responding to the answers and best of luck for the coming quarters. Thank you. Thank you, sir. The next question is from the line of Ankit Cha from Canara Robeco AMC. Please go ahead. Hello, am I audible? Yes, sir, you are audible. My first question is, with the lower GST incentives, any margin impact that you have or would like to call out, any guidance for this year? Also, we had this target of reaching 15%+ margins. Will that happen once Jammu ramps up completely? Ankit, thank you. This year, Ankit, our target was on the top line. It is a newly commissioned facility. We are targeting to acquire customers and, or what we can say, to achieve the earlier guided value of INR 400 crore turnover on the yearly basis. Definitely our margin may adversely impact because of the GST reduction. As I already covered that it is a B2B business, then that is why the pricing will be redefined. The benefit passed to the customer, all that can be redefined. Still, we are optimistic that in long term, our 15% margin should sustain. Got it. Second question was, how the receivables and inventory has risen and working capital days has also increased by 12 days. Can you explain the reason for that? Yes. Ankit, that is a major reason of our increase in working capital investment is mainly due to sustain of the ongoing growth pattern and to sustain our future growth projection. That is why we have to do certain investment in our working capital to support our upcoming growth. Let us say once the sale will be on the improved number, the days will be normalized. Okay. It will come back to 85, 90. Normal level. Yes. Yeah. Those were the questions. Thank you and all the best. Thank you. The next question is from the line of Gaurav Bhama from GM Financial. Please go ahead. Hi, sir. Am I audible? Yes, sir. Hello. Yeah. Hi. Yes, sir. Rakun sir, first of all, congratulations on the strong set of numbers. I have two questions. One is a clarification on an earlier quoted number. It was said that Jammu at the peak potential will do north of INR 1,000 crore or north of INR 1,400 crore? If I talk about numbers, Jammu, normally our CDMO manufacturing capabilities peaked out at a capacity utilization of, say, 65% to 70%. Going by the full potential of our Jammu plant, if down the years from four to five years, we should be estimating to reach a 65% to 70% capacity utilization, which will translate into INR 1,400 crore, north of INR 1,400 crore. Understood. My second question is regarding contribution of Sharon Bio for this quarter. You can clarify that. That will be helpful. Sorry. Can you please repeat your question? I wanted to understand what was the contribution of Sharon Bio to the top line for this quarter. If you could clarify that would be helpful. Yes. Sharon has been our good acquisition, and it is growing steadily along with the company's growth projection. The contribution is steadily increasing in sync with our overall growth trajectory. Understood. Thank you, sir. Thank you. Participants who wish to ask a question may press star and one on their touch-tone phones. Participants who wish to ask a question may press star and one on their touch-tone phones. The next question is from the line of Bijal Bakhai from Amit Jesani Print Service. Please go ahead. Hi, sir. Good set of numbers. Just two queries. In the previous con calls, we had discussed about our asset turn being about three to four times approximately. So Jammu, we have invested close to INR 700 crores. So logically, our top line could have been INR 2,100 to INR 2,500. So why are we capping it at INR 1,400? Any specific reasons? The investment is INR 480 crore. Okay. It is not seven. I was under the okay, INR 700 crores I thought it was. The second thing is when do we reach a breakeven for Jammu in terms of the four blocks we have? Individually or on a total facility basis, I am okay because right now I don't think we would have broken even. That would have also been putting pressure on the margins. Or am I wrong? You are looking to be. Yes. If we talk about breakeven, we are nearing the EBITDA breakeven on our current turnover. As we discussed earlier also, considering this change dynamics of our 12% to 5% of GST, we are reassessing our EBITDA levels, and we should be able to comment on that in coming quarter. Okay. Thank you. That's all for me. Thank you, sir. Participants who wish to ask a question may press star and one on their touch-tone phone. Participants who wish to ask a question may press star and one on their touchtone telephone. The next question is from the line of Rahul Shah from Gold Star LLP. Please go ahead. My question is, you mentioned that in long term, the margins will be 15+. Can you just comment because of this GST rework, which we have to do now from 12% to 5%, and you might have signed some contracts already with some customers before this GST reset happened, and that may impact immediate this FY 2026 margin. If you can give some color on FY 2027 also, on a short term, it will be helpful. Sure. That already I have covered that if you see from 12% to 5%, then we can say that it's a minus 7%. The other side say that we have the 5% price advantage from our competitor. Right. It's a clear cut two way to see to this way. What our Jammu facility is that we have developed a very good facility. It come out in a good way. From the IPO time, it was under construction, then we have started the commercial production. We have been awarded WHO GMP certificate. We are going on with the PIC/S certification. A lot of customers audit is already happened, and commercialization with few is already done. So let's say in B2B business, we have seen from a long trajectory that our margin stabilized somewhere between 13%-17%. Or as a median, we can say, the sustainable margin is at 15%. So the same trajectory, hopefully that margin can be achieved from Jammu as well once the turnover stabilize at a cross the breakeven level. Okay. You mean to say irrespective of this hiccup of GST, margin will sustain once the unit efficiencies come up, it will sustain at 15%? Yes. Thank you. Yeah. Thank you. Participants who wish to ask a question may press star and one on their touchtone telephone. Participants who wish to ask a question may press star and one on their touchtone telephone. As there are no further questions from the participants. Sir, we have another question. Should we take that ahead? Yes, please. The next question is from the line of Gaurav Bhama from GM Financial. Please go ahead. Hi. Am I audible? Yes. Yes, sir. You are audible. I just wanted to understand if we disclose the contribution of domestic branded generic business to the top line. Is it something if you are comfortable with for the 2Q? Domestic along branded Gaurav, we have reclassify our business areas effective from 1st of April 2025 between CDMO and Branded Generic. That breakup in previous segments may not be available as of now. Sure thing, sir. Thank you. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Thank you once again for your continued support and confidence in Innova Captab. We remain committed to deliver sustained growth and creating long-term value for all our stakeholders. Thank you very much. On behalf of Innova Captab Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.