Akums Drugs and Pharmaceuticals Set to Launch IPO Tomorrow

The excitement is building in the business world as Akums Drugs and Pharmaceuticals is all set to kick off its Initial Public Offering (IPO) tomorrow, July 30th. This company, which has made a name for itself in the pharmaceutical industry since its establishment in 2004, specializes in contract development and manufacturing, offering a wide range of products and services both in India and globally.

Akums focuses on providing comprehensive solutions for pharmaceutical product development and manufacturing, which includes research and development on various formulations, as well as preparing and submitting regulatory documents for markets both at home and abroad. The company is also known for producing and marketing branded medications and active pharmaceutical ingredients (APIs).

In terms of market presence, Akums has developed over 4,025 formulations across more than 60 dosage forms. Interestingly, in the last fiscal year, the company manufactured products for 26 of the top 30 pharmaceutical firms in India. Their 10 manufacturing facilities have the capability to produce a staggering 49.21 billion units annually for its CDMO segment.

Looking ahead, Akums plans to expand its production further by adding two more manufacturing units to boost capacity in its CDMO division, expected to be operational by FY 2025. Many of its facilities are already accredited by esteemed international regulatory bodies, including the US National Sanitation Foundation (US NSF), World Health Organisation (WHO-GMP), and European Good Manufacturing Practice (EU-GMP).

In financial terms, Akums Drugs reported a 13.81% growth in revenue between March 2023 and March 2024, despite facing a significant drop in profits after tax, which plummeted by nearly 99%.

As for the IPO, it will be open for subscription from tomorrow until Thursday, August 1st. The price band for the shares has been set between ₹646 and ₹679, with a lot size of 22 shares. Interestingly, a discount of ₹64 per share is being offered to eligible employees who participate in the employee reservation portion of the IPO.

The public issue is valued at ₹1,857 crore, which consists of a fresh issue of ₹680 crore and an offer-for-sale (OFS) of over 17.33 million equity shares by its promoters and other investors. Notably, the promoters, Sanjeev and Sandeep Jain, will each be selling around 15.12 lakh equity shares.

The proceeds from this IPO are intended to be used to clear the company’s debts and fund its subsidiaries including Pure and Cure Healthcare and Maxcure Nutravedics. Additionally, some of the funds will be dedicated to supporting inorganic growth and increasing working capital requirements.

The IPO’s allocation for investors is structured with 75% set aside for qualified institutional buyers, at least 15% for non-institutional investors, and 10% reserved for retail investors. The shares are set to be allocated on Friday, August 2nd, with an expected listing date on both the BSE and NSE on August 6th.

Currently, Akums Drugs has a grey market premium (GMP) of +190, which is a good sign as it indicates healthy investor interest, suggesting a potential listing price around ₹869, approximately 27.98% higher than the upper end of the IPO price band.