Akum Drugs & Pharmaceuticals IPO Opens On 30 July; Issue Size 1,856 Cr

The initial public offering (IPO) of Akum Drugs Pharmaceuticals opened on 30 July in an attempt to raise over Rs 1,800 crore from the public market.

The Rs 1,856 crore IPO consisted of fresh issues of up to Rs 680 crore and an offer-for-sale (OFS) worth Rs 1,176 crore by promoter and investor selling shareholders.

The firm fixed the price band for the issue at Rs 646 to 679 per share. The retail investors can bid for the maximum of 13 lots with one lot containing 22 shares. The minimum capital required for one lot is Rs 14,938

The IPO opened on 30 July is scheduled to close on 01 August followed by the allotment on 02 August. Subsequently the IPO will list on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) on 06 August. 

ICICI Securities, Axis Bank, Citigroup Global Markets and Ambit are the book running lead managers, while Link Intime India is the registrar to the offer. 

Analyst Note

“Akums Drugs and Pharmaceuticals’ domestic market share increased to 30.2 per cent in FY24 from 26.7 per cent in FY21. Based on FY24 adjusted earnings, the IPO is priced at a price-to-earnings (PE) ratio of 29.79, which appears aggressively priced. We expect a listing at around Rs 880 to 900 per share, resulting in a listing gain of approximately 30 per cent,” said Amit Goel, Co-Founder and Chief Global Strategist, Pace 360.

“At the upper price band of Rs 679, Akums is available at a PE of 29.8 times (FY24) and Market cap of 2.6 times (FY24), which appears to be fully priced. However, considering its position in the industry, clientele in domestic and global markets, strong growth prospects and excluding the accounting provisions, we assign a ‘Subscribe’ rating on a medium to long term basis,” stated Geojit Financials.

IPO Objectives

The proceeds of Rs 680 crore from the fresh issue will be utilised for prepayment or scheduled repayment of a portion of certain outstanding borrowings availed by the company and general corporate purposes.

Additionally, the firm will also get benefits on listing in the public market which will enhance the brand’s visibility and provide liquidity to the shareholders. 

Firm’s Financials

The firm registered revenue of Rs 4,212 crore in FY24, compared to Rs 3,700 crore in FY23. 

However, the firm’s profit after tax (PAT) decreased to Rs 79 lakh in FY24 compared to Rs 97.82 crore in FY23. 

Overall, revenue increased by 13.8 per cent, whereas PAT reduced to almost 100 per cent. 

About Akums Drugs and Pharmaceuticals

Akums Drugs and Pharmaceuticals is a contract development and manufacturing organization (CDMO), offering pharmaceutical products and services in India and overseas. The company carries out operations across the pharmaceutical value chain, operating as a CDMO, marketer of formulations, and manufacturer of APIs. 

Akums Drugs’ presence in the Indian pharmaceutical landscape is augmented by a domestic CDMO presence and amplified through global export initiatives. This provides a competitive edge in the industry, allowing it to navigate growth opportunities across multiple markets.