Akums Drugs and Pharmaceuticals IPO: The initial public offering (IPO) of Akums Drugs and Pharmaceuticals Limited, which was opened for public subscription on July 30, has already been oversubscribed. Till 5:00 pm on the second day of bidding on Wednesday, the 1,856.74-crore IPO received a 4.44 times subscription, garnering bids for 6,72,59,566 shares as against 1,51,62,239 shares on offer.
According to the latest data, the retail quota received a 9 times subscription, while the non-institutional investors category got a 8.49 times subscription. The qualified institutional buyers (QIB) category received a 94 per cent subscription.
The price band of the Akums Drugs and Pharmaceuticals IPO, which will be closed on August 1, has been fixed at Rs 646-Rs 679 apiece. Its allotment will likely be finalised on August 2, while its listing will take place on both BSE and NSE on August 6.
Akums Drugs and Pharmaceuticals IPO GMP Today
According to market observers, unlisted shares of Akums Drugs and Pharmaceuticals Ltd are trading Rs 174 higher in the grey market as compared with its issue price. The Rs 174 grey market premium or GMP means the grey market is expecting a 25.04 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
The 174 GMP is lower than the Rs 177 grey market premium recording in the morning.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Akums Drugs and Pharmaceuticals IPO: Analysts’ Recommendations
Most analysts have granted a ‘Subscribe’ rating to the Akums Drugs and Pharmaceuticals IPO.
In its IPO note, brokerage firm Anand Rathi said Akum Drugs is the largest India-focused contract development and manufacturing organisation (CDMO) in terms of revenue, production capacity, and the number of clients served during the financial year 2023. Its client base comprises a wide variety of organizations, including pharmaceutical companies, nutraceutical firms, cosmo-derma businesses, wellness companies, e-commerce enterprises, healthcare providers, and both central and state government entities.
“The company’s put call liabilities for recent new contracts adjustments were mandated under GAAP measures due to the lack of additional funding support. Based on restated financial data, although the issue pricing seems aggressive, this perception changes if we exclude such accounting provisions,” it added.
The company’s P/E ratio is 27.2 times based on its FY24 earnings, with a market capitalisation of Rs 1,06,855 million after the issuance of equity shares and a market cap-to-sales ratio of 2.52 times its FY24 earnings, the brokerage stated.
“Looking at these factors, we recommend ‘Subscribe – Long Term‘ rating to the IPO,” Anand Rathi said in its IPO note.
Another brokerage Stoxbox in its IPO note said the company has demonstrated robust growth and delivered superior returns led by its large scale in capacity, formulation capability, and R&D competency, which allows it to extract a large proportion of segment growth as pharmaceutical sponsors look for companies with scale to ensure a reliable supply of large quantities.
“Excluding adjusted put call liabilities, the IPO is valued at a reasonable P/E of 29.7x. Therefore, we recommend a SUBSCRIBE rating for the issue,” Stoxbox stated.
Rajan Shinde, research analyst at Mehta Equities, also said, “Given the anticipated growth in the Indian CDMO market, along with Akums expanding global footprint and strategic move into API manufacturing, further enhance its long-term prospects. Hence, we recommend investors to “SUBSCRIBE” the Akums Drugs and Pharmaceuticals ltd IPO for a long term perspective. As company is domestically largest CDMO player we believe market could give Akums a premium multiple towards its leadership position this may results is delivering healthy listing gains over above 25% on its issue price.”
Akums Drugs and Pharmaceuticals IPO: More Details
Akums Drugs and Pharmaceuticals Ltd is a combination of fresh issue of 1 crore shares aggregating to Rs 680 crore and an offer for sale of 1.73 crore shares aggregating to Rs 1,176.74 crore.
Investors need to apply for a minimum of 22 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,938 [22 (lot size) x Rs 679 (upper price band)].
Those selling shares in the OFS are Sanjeev Jain, Sandeep Jain and Ruby QC Investment Holdings Pte Ltd.
The public issue has a price range of Rs 646 to Rs 679 per share Akums Drugs and Pharmaceuticals Ltd on Monday said it has collected Rs 829 crore from anchor investors.
Proceeds from the fresh issue will be used to repay debt, fund the working capital requirements of the company, pursue inorganic growth initiatives through acquisition, and for general corporate purposes.
Brokerage houses have pegged the company’s market capitalisation at Rs 10,697 crore post-issue.
Founded in 2004, Akums is a pharmaceutical contract development and manufacturing organization (CDMO), offering a comprehensive range of pharmaceutical products and services in India and overseas.
As of September 30, 2023, key clients for the company’s CDMO business include Alembic Pharmaceuticals, Alkem Laboratories, Cipla, Dabur India, Dr Reddy’s Laboratories, Hetero Healthcare, Ipca Laboratories, Mankind Pharma, MedPlus Health Services, Micro Labs, Mylan Pharmaceuticals, Natco Pharma, Sun Pharmaceutical Industries, and Amishi Consumer Technologies (The Mom’s Co).
ICICI Securities, Axis Capital, Citigroup Global Markets India and Ambit Pvt Ltd are the running lead managers to the issue.
The equity shares of the company are proposed to be listed on BSE and NSE.
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