Homegrown generic pharma manufacturer Innova Captab made a flat debut on the stock exchanges on Friday, in sync with bearish broader market. This is the last main board IPO to make its debut on the stock exchanges this year. As many as 59 main board IPOs listed on the domestic bourse this year, with most of them, barring 4, are trading above their issue prices.
The shares of Innova Captab were listed at ₹452.1 on the NSE, a premium of 0.9% over the initial public offering (IPO) price of ₹448, which was below Street expectations. The pharma company debuted on the BSE at ₹456.10, up 1.8% over the issue price.
Post subdued listing, Innova Captab shares gained momentum and surged as much as 16% to hit a high of ₹521 and ₹520 on the BSE and the NSE, respectively. The market capitalisation climbed to ₹2,939 crore.
Ahead of listing, Innova Captab was commanding a grey market premium (GMP) of ₹32 in the unofficial market, indicating listing to be around ₹480 (₹448 + ₹32), up 7% over the IPO price. The company witnessed sharp correction in its GMP in the last ten days, with its premium falling by about 85% from ₹210 on December 16.
The decline in GMP can be attributed to the recent dull listings of RBZ Jewellers, Credo Brands Marketing, Muthoot Microfin and Suraj Developers earlier this week. The decline in volume trading ahead of New Year holidays also impacted stock listing.
“This lackluster performance falls short of pre-listing expectations. Despite such a listing, Innova Captab still possesses its core strengths, including a strong market position, robust financials, and strategic growth initiatives. However, the flat debut highlights the potential risks associated with the highly competitive market, regulatory environment, and currency fluctuations,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.
“Given the uncertain outlook, a cautious approach is warranted, and investors may exit their position; however, those who want to hold it should maintain a stop loss at the issue price,” Nyati says.
The ₹570-crore IPO of Innova Captab received good response from investors, with its issue subscribing 55.26 times. The public issue was booked 17.15 times in the retail category, 116.73 times in qualified institutional buyers (QIBs), and 64.95 times in the non-institutional investors (NII) category.
The IPO comprises fresh equity shares worth ₹320 crore and an offer for sale up to 5,580,357 equity shares at a price range of ₹426-448 a share. The company intends to use capital raised from the issuance of fresh equity shares for payment of debt, investment in the subsidiary, UML. A part of the fund will be used to fund working capital requirements and meet general corporate purposes.
Formed in January 2005, Innova Captab is a pharmaceutical company operating in three business segments. It provides contract development and manufacturing services to Indian pharmaceutical companies. Besides, it has domestic as well as international businesses dealing in branded generics. Its product portfolio includes tablets, capsules, dry syrups, dry powder injections, ointments and liquid medicines.
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