mRNA Covid vaccine maker Gennova lines up Rs 250-crore capex: Crisil

The Emcure Pharma arm has tied up with Seattle-based HDT Biotech Corp for the vaccine, on which animal trials have been completed. Phase-I and II trials likely to be completed in 2-3 months

Gennova Biopharmaceuticals (Gennova), which is making the messenger RNA (mRNA) vaccine for Covid-19, plans to raise Rs 135 crore in debt to fund the Rs 250-crore capital expenditure (capex), according to rating agency Crisil.

Gennova, a subsidiary of Pune-based Emcure Pharmaceuticals (Emcure), has collaborated with Seattle-based HDT Biotech Corporation for the vaccine. The vaccine has successfully completed animal trials. Phase I and II clinical trials are expected to be completed in the next two to three months.

A planned capex of Rs 250 crore for facility expansion is expected to be funded by the Rs 70-crore government grant, Rs 135-crore debt, and the rest from internal accrual, said Crisil in a statement.

Gennova is strategically important to Emcure, given its presence in the niche biopharmaceutical and vaccine development segment. It has a portfolio of seven products, including injections Pegex, Emgrast M, and Hamsyl, in oncology, cardiovascular, neurology, and nephrology segments.

The agency assigned the A/Stable rating to the long-term bank facilities of Gennova. The rating reflects the strong operational, managerial, technical, and financial support the company receives from its parent Emcure.

Its scale of operations is modest, despite a 5.5 per cent compound annual growth rate in revenue over the five years ended 2019-20 (FY20). Its financial risk profile is expected to remain average on account of moderate capex plans, working capital-intensive operations, and moderate net worth. The net worth was expected to be Rs 152 crore as on March 31.

The company posted revenue of Rs 211 crore in FY20 (Rs 182 crore in 2018-19, or FY19). Its net profit stood at Rs 38 crore in FY20 (Rs 18 crore in FY19). Its operations are working capital-intensive and likely to remain so over the medium term. Gearing is expected to peak to 0.95x by 2021-22. Revenue growth is expected to remain healthy at 10 per cent in 2020-21, coupled with operating profitability above 30 per cent over the medium term.

Timely ramp-up of new facility and improvement in financial risk profile will remain monitorable, added Crisil.