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Akums Drugs and Pharmaceuticals Limited is a pharmaceutical contract development and manufacturing organization (CDMO) offering a comprehensive range of pharmaceutical products and services in India and overseas. Akums Drugs and Pharmaceuticals IPO is a book built issue of Rs 1,856.74 crores. The issue is a combination of fresh issue of 1 crore shares aggregating to Rs 680.00 crores and offer for sale of 1.73 crore shares aggregating to Rs 1,176.74 crores.

About Akums Drugs and Pharmaceuticals:

• Incorporated in 2004, Akums Drugs and Pharmaceuticals is a contract development and manufacturing organization (“CDMO”) offering a comprehensive range of pharmaceutical products and services in India and overseas.
• The company is also engaged in the manufacturing and sale of branded pharmaceutical formulations and active pharmaceutical ingredients (“APIs”).
• The other services include R&D, filing of regulatory dossiers in the Indian and global markets, and other testing services.
• The company has procured 5 patents for various dosage forms, formulations and processes as of March 31st, 2024. Additionally, the company holds 1,432 registered trademarks and has 506 pending trademark applications in several classes.
• The company operates 12 manufacturing units . Out of these eight in Haridwar, Uttarakhand, 1 in Kotdwar, Uttarakhand, 1 unit in Baddi, Himachal Pradesh and 1 unit in each of Dera Bassi and Lalru, Punjab.
• The company has 4 R&D centers, 3 dedicated to CDMO and formulations businesses and 1 at Barwala, Haridwar, for API business. API R&D center features a small volume, highly potent API manufacturing unit.
• The company has a longstanding relationship with its clients.

Financials : Akums Drugs and Pharmaceuticals IPO

Anchor: Akums Drugs and Pharmaceuticals IPO

Akum Drugs and Pharmaceuticals raised Rs 829 crore from anchor investors. Anchor investor include Abu Dhabi Investment Authority, Smallcap World Fund, Inc, HSBC Global Investment Funds, SBI Mutual Fund (MF), Bandhan MF, Motilal Oswal MF, Aditya Birla Sun Life MF, SBI Life Insurance Company, HDFC Life Insurance Company and ICICI Prudential Life Insurance Company etc.

Salient Points: Akums Drugs and Pharmaceuticals IPO

• Indian domestic CDMO market is projected to grow at a CAGR of of 14.3% from FY2024 to FY 2028.
• In FY 2024. CDMO business contributed around 78 to the revenue, followed by generic formulations 16.74%, and API 5.09%.
• Those selling shares in the OFS are Sanjeev Jain, Sandeep Jain and Ruby QC Investment Holdings Pte Ltd.
• 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 purpose.
• Major clients of 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 etc.

• The company derived 93.55% revenue from India and 6.45% from outside India in FY 2024.
• It has expanded operations through its Subsidiary, Maxcure Nutravedics. This Subsidiary is equipped with an advanced manufacturing unit dedicated to the production of a wide array of products, including nutraceuticals, food supplements, herbal and ayurvedic formulations. 
• Peers

• Largest India-focused CDMO by revenue, production capacity, and clients served.
• The company has got repeat orders in the past 5 years from 38 of its 50 largest clients as of March 31, 2024.
• These 50 largest clients have a legacy of more than 10 years. Their revenue contribution grew from ₹1,354 Cr during FY 2022 to ₹1,441 Cr during FY2024.
• The R&D focus has led the company to win 45 DCGI approvals in FY24, nearly 2.7 times the number of approvals by 3 of its peers combined for FY24.
• Akums Drugs reported Loss in FY2022 and FY2024. These losses are due to accounting adjustments related to fair value changes in financial instruments (put option liability). Excluding this, revised P/E ratio stands at 29.8.
• I intend to apply in Akums Drugs and Pharmaceuticals IPO. The valuations are streched which could result in low to moderate gains. Their 30% share of domestic pharma CDMO market is impressive. The company manufactured formulations for 26 of the leading 30 pharmaceutical companies in FY2024.
• GMP as reported on social media has been Rs. 170 (25%)
• This post is exploratory and educational purposes only. Please do your own diligence before investing in SME IPOs like this.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.