As the Indian pharmaceutical landscape continues to expand, Akums Drugs and Pharmaceuticals has emerged as a key player in the sector. Established in 2004, Akums - Pharmaceutical Contract Manufacturer in India the company has carved out a significant niche for itself as a leading contract manufacturer of pharmaceutical formulations. With its upcoming IPO, Akums Drugs is set to offer investors a fresh opportunity to participate in its growth journey.

Company Overview

Akums Drugs and Pharmaceuticals has built a reputation for producing high-quality pharmaceutical products. The company's extensive portfolio includes a range of formulations across multiple therapeutic categories. Akums has collaborated with numerous domestic and international pharma companies, making it a trusted name in the industry.

Akums Drugs IPO Details

IPO Date | July 29, 2024 to August 1, 2024 |
| Listing Date | Tuesday, August 6, 2024 |
| Face Value | ₹2 per share |
| Price Band | ₹646 to ₹679 per share |
| Lot Size | 22 Shares |
| Total Issue Size | 2.73 crore shares (aggregating up to ₹1,856.74 Cr) |
| Fresh Issue | 1 crore shares (aggregating up to ₹680.00 Cr) |
| Offer for Sale | 1.73 crore shares (aggregating up to ₹1,176.74 Cr) |
| Listing At | BSE, NSE |

Investment Categories and Details

Akums Drugs IPO Timeline

Objects of the Issue

The company aims to utilize the net proceeds from the IPO for the following purposes:

1. Funding Inorganic Growth: A significant portion of the funds will be used for acquisitions to bolster the company's growth prospects.
2. General Corporate Purposes: The remaining proceeds will be used for general corporate purposes.

Akums Drugs Pros & Cons

Pros:

1. Strong Market Position: Akums is a dominant player in India's CDMO sector, with a significant market share and a diverse product portfolio catering to major pharmaceutical companies​ (Chittorgarh.com)​.
2. Growth Potential: The Indian pharmaceutical market is expanding rapidly, driven by factors like increased healthcare access, rising insurance penetration, and a growing chronic disease burden. This provides Akums with ample opportunities for growth​ (Finance Saathi)​.
3. Financial Performance: Despite fluctuations, the company's financials have shown improvement, with a notable turnaround in profitability in recent years​ (Chittorgarh.com)​.

Cons:

1. High Valuation: The IPO is priced at a relatively high price-to-earnings ratio of around 30, which might limit the upside potential for investors​ (MoneyWorks4Me)​.
2. Limited R&D Focus: As a CDMO, Akums has limited involvement in research and development, potentially restricting its ability to innovate and compete with companies having strong R&D capabilities​ (MoneyWorks4Me)​.
3. Volatile Margins: The company's profitability margins have been inconsistent, with notable swings in profit after tax (PAT) margins over recent years​ (Chittorgarh.com)​.

Should You Subscribe?

The IPO has been priced with a Price-to-Earnings (P/E) ratio of approximately 28x, based on FY24 adjusted earnings. While some analysts, like Amit Goel of Pace 360, anticipate a listing gain of around 30%, potential investors should exercise caution. The primary use of funds for acquisitions and the significant offer for sale indicate a focus on providing exits for existing stakeholders, which might raise concerns about the company's long-term growth focus.

In conclusion, the Akums Drugs and Pharmaceuticals IPO presents an opportunity with notable growth prospects and a strong market position. However, investors should carefully evaluate the company's short-term focus, sector-specific risks, and the potential for operational improvements before making an investment decision.