The Akums Drugs IPO would be an attractive proposition for investors seeking some action in the pharma space
Delhi-based Akums Drugs and Pharmaceuticals Ltd, a prominent name in the Indian pharmaceutical industry, is all set to make its debut in the public market. The company has announced the price band of its initial public offering (IPO) at Rs 646-679 per share, with the offering scheduled to open for subscription on July 30. This move marks a significant milestone for the company as it seeks to expand its reach and capitalize on the growing opportunities in the pharmaceutical sector.
IPO Details and Timelines
The IPO will commence with anchor bidding on July 29, just a day before the public offering opens, and will close on August 1. This tight window highlights the urgency and the market’s anticipation for this offering. The finalization of allotments is set for August 2, followed by the initiation of refunds and the crediting of equity shares to successful bidders on August 5. The company plans to make its market debut on August 6, listing on major stock exchanges, which is expected to garner significant investor interest.
The offering comprises a fresh issue of Rs 680 crore and an offer for sale (OFS) of up to 1.73 crore shares by its existing shareholders and promoters. At the upper price band, the OFS is valued at Rs 1,175 crore, bringing the total IPO size to an impressive Rs 1,855 crore. The valuation pegs the total market value of Akums Drugs at Rs 10,000 crore.
Stakeholder and Promoter Dynamics
The promoters of Akums Drugs, Sanjeev Jain and Sandeep Jain, are set to sell 15.12 lakh equity shares each as part of the OFS. Additionally, investor Ruby QC Investment Holdings Pte Ltd will offload 1.43 crore shares, with their weighted average cost of acquisition being Rs 231.64 per share. Currently, the promoters hold a substantial 82.44 percent stake in the company. Ruby QC Investment holds 14.65 percent, and the remaining 2.91 percent is owned by employee trusts.
Utilization of IPO Proceeds
The net proceeds from the fresh issue are earmarked for several critical areas. Primarily, the funds will be utilized to repay the debts of Akums Drugs and its subsidiaries, Maxcure Nutravedics and Pure and Cure Healthcare. This strategic move is aimed at improving the financial health of the company and enhancing its profitability. Additionally, a portion of the IPO funds will be allocated towards meeting incremental working capital requirements and supporting inorganic growth initiatives. These steps are crucial for Akums to maintain its competitive edge and achieve sustainable growth.
Market Position and Growth Prospects
Akums Drugs claims to be the largest in revenue, highest production capacity, and the largest clients base India-focused CDMO in FY23. It carved out 30.2 percent of the Indian domestic CDMO market in value terms in fiscal 2024 alone. On its part, the Indian domestic CDMO market is growing at a pretty robust pace, with a projected compound annual growth rate of 14.3 percent from FY24 to FY28. This pace is nearly twice the historical growth pace for the company, while the market-size is likely to reach US$2.8 bn by FY28.
Operational Capacities and Expansion Plans
Akums operates out of 10 manufacturing units dedicated to the CDMO business, boasting a substantial annual formulations manufacturing capacity of 49.23 billion units as of FY24. The company is also looking forward to the operational commencement of its new injectable facility in fiscal 2025, which is expected to further boost its manufacturing capabilities and meet the increasing demand for injectable formulations.
Leadership in Book Management and Registrations
The leading names in financial services would manage the IPO, while ICICI Securities, Axis Capital, Citigroup Global Markets India, and Ambit would be the book running lead managers. For an uninterrupted process at both ends—of the company and the prospective investors—Link Intime India has been appointed registrar to the offer.
The IPO of Akums Drugs and Pharmaceuticals Ltd. is one of those moments that write a new chapter in the annals of the Indian pharmaceuticals market. Firmed up with strong market positions, robust growth prospects, and strategic usage of proceeds, this Company will be better placed in leveraging opportunities in an expanding market. The Akums Drugs IPO would be an attractive proposition for investors seeking some action in the pharma space, due to its leading positioning in the CDMO space, with good prospects in the future. With the company all set to make its market debut, it remains to be seen how this IPO would play out in these dynamic market conditions and is keenly watched and awaited by the financial community and investors at large.
