Innova Captab Navigates Headwinds with Robust Growth and Strategic Expansion in Q2 & H1 FY26

Innova Captab Limited, a prominent pharmaceutical player, has demonstrated a resilient performance in the second quarter and first half of fiscal year 2026, showcasing strong revenue growth despite challenging market conditions. The company, operating on a consolidated level, reported a significant 19.5% year-on-year increase in revenue from operations for both Q2 FY26 and H1 FY26. For Q2 FY26, the revenue stood at INR 380.4 crore, while for H1 FY26, it reached INR 731.9 crore. This growth underscores the company's sustained demand momentum and operational efficiency, even as it grappled with declining Active Pharmaceutical Ingredient (API) prices.

The company's performance was driven by its two primary business verticals: CDMO Services and Products, and Branded Generics. The CDMO segment, which serves over 300 clients globally, recorded a robust 15% year-on-year growth in Q2 FY26, contributing INR 265.7 crore to the total revenue. This growth was propelled by deeper client engagement and an expansion of the product portfolio, mitigating the impact of API price declines. The Branded Generics business, with its direct presence across India and in over 60 international markets, showed an even more accelerated growth, clocking a 31% year-on-year increase in Q2 FY26 to reach INR 114.6 crore. This segment's success is attributed to an expanded product basket and enhanced marketing efforts, signifying a strong front-end presence.

Strategic Initiatives and Capacity Expansion

Innova Captab has been proactive in strengthening its manufacturing capabilities and expanding its market reach. A significant milestone in Q2 FY26 was the successful inspection of its Cephalosporin plant in Baddi by the UK Medicine and Healthcare products Regulatory Agency (UK-MHRA). This accreditation, alongside the successful inspection of the Jammu facility by the State Service of Ukraine on Medicine and Drug Control (SMDC) and its PIC/S certification, enhances the company's global credibility and facilitates access to regulated international markets. The Jammu facility, which commenced commercial operations in January 2025, represents a substantial investment of over INR 480 crore. Management expects this facility to achieve an optimum capacity utilization of 65-70%, potentially generating revenue exceeding INR 1,400 crore at its peak within the next 3-4 years.

The company's strategic reorganization, effective April 1, 2025, into distinct CDMO and Branded Generics verticals, aims to streamline operations and enhance strategic focus for each business area. This move is expected to lead to improved efficiency and growth. Furthermore, Innova Captab has significantly expanded its product portfolio from over 1,000 products in FY21 to more than 3,700 products in FY25, a key driver for sustained growth across its segments.

Navigating Challenges and Future Outlook

Despite the positive growth trajectory, Innova Captab faced certain challenges. The reduction in the GST rate for pharmaceutical formulations from 12% to 5% has impacted the direct GST incentive benefit from the Jammu facility. While the overall quantum of benefit remains, the company now needs to achieve higher sales volumes (approximately INR 1,400 crore compared to INR 650 crore previously) to fully realize the incentive. Additionally, the company experienced an increase in working capital investment, leading to a rise in inventory and receivables, which management attributes to supporting ongoing growth and future projections, expecting normalization as sales improve.

Looking ahead, Innova Captab's management remains optimistic about sustaining its growth momentum. The company aims to double its top line, EBITDA, and PAT in the next three years, targeting a consistent 20%+ growth trajectory. Long-term EBITDA margins are expected to sustain at 15%. The successful integration of acquired assets, such as Sharon Bio Medicine, which is growing steadily, further strengthens its product offerings and market position. With multiple growth levers in motion, including substantial room for scale-up, geographic diversification, and a robust product pipeline, Innova Captab is well-positioned for resilient performance across both its business verticals and continued value creation for stakeholders.