Akums Drugs raises ₹829 cr from anchor investor; check GMP, IPO details

Delhi-based pharma company Akums Drugs and Pharmaceuticals successfully secured ₹828.78 crore in investments from 50 anchor investors on July 29, a day ahead of the opening of the initial public offering (IPO). The pharmaceutical contract development and manufacturing organisation (CDMO) issued 1.22 crore equity shares to anchor investors at the upper end of the IPO price band of ₹679 per equity share, as per the exchange data.

The anchor book saw participation from marquee global investors such as Abu Dhabi Investment Authority, Blackrock, Smallcap World Fund, Florida Retirement System, HSBC Global, Carmignac Portfolio, and Neuberger Berman Emerging Markets Equity Fund. Domestic mutual funds such as SBI Mutual Fund, Aditya Birla Sun Life Trustee, Franklin India, Templeton India, DSP India Fund, IIFL Asset Management, Tata Mutual Fund, Motilal Oswal Mutual Fund, Bandhan Mutual Fund, Edelweiss Trusteeship, and JM Financial Mutual Fund also participated in the anchor book.

The ₹1,857 crore IPO of Akums will open for three days between July 30 and August 1, while the tentative date for listing of the shares on the BSE and NSE is August 6. Ahead of the IPO, shares of Akums have created buzz in the unlisted market, with grey market premium (GMP) jumping to ₹205 apiece over issue price, from ₹165 on July 25.

Most brokerages, including Swastika Investmart and Anand Rathi, have recommended ‘Subscribe’ ratings to the IPO of Akums Drugs.  Anand Rathi in its report says that the company's profit-to-earnings (P/E) ratio is 27.2 times based on its FY24 earnings, with a market capitalisation of ₹10,685.5 crore after the issuance of equity shares and a market cap-to-sales ratio of 2.52 times its FY24 earnings.

The company has set a price band for its IPO at ₹646-679 per share and the lot size is 22 shares and in multiples thereafter. The minimum application amount for retail investors is ₹14,938 for 1 lot, while the maximum is ₹194,194 for 13 lots.

Promoted by Sanjeev Jain and Sandeep Jain, the CDMO looks to raise a total of ₹1,857 crore at the upper end of the price band of ₹679 per share. The issue is a combination of a fresh issue of equity shares worth ₹680 crore and an offer-for-sale (OFS) of 1.73 crore shares worth ₹1,177 crore by promoters and an existing investor. 

Under the OFS, Sanjeev Jain and Sandeep Jain will sell 15.12 lakh equity shares each, while investor Ruby QC Investment Holdings Pte Ltd will pare 1.43 crore shares.

The company intends to use IPO proceeds from fresh equities to repay debt of the company and its subsidiaries - Maxcure Nutravedics and Pure and Cure Healthcare. A part of the fund will be used to meet working capital requirements, and acquisitions for inorganic growth, and for general corporate purposes.

As per the revised document filed with market regulator SEBI, the company has reserved 75% of the issue for qualified institutional buyers (QIB), up to 15% for non-institutional institutional investors (NII), and the remaining 10% for retail investors. This offer includes a reservation of shares worth up ₹15 crore for eligible employees, which will be offered at a discount of ₹64 per equity share.

Established in 2004, Akums is one of the country’s leading CDMO, offering pharmaceutical products and services in India and overseas. Since its inception, it has manufactured 4,025 commercialised formulations across over 60 dosage forms. During the financial year 2023, it manufactured formulations for 26 of the leading 30 pharmaceutical companies in terms of sales in India, as per F&S report mentioned in the DRHP. The company counts Alembic Pharma, Alkem Lab, Cipla, Dabur India, Dr. Reddy’s, Ipca Lab, Mankind Pharma, MedPlus Health Services, Micro Labs, Mylan Pharmaceuticals, Natco Pharma, Sun Pharma, UCB, and The Mom’s Co, among its key clients for CDMO business.

For the financial year ended March 31, 2024, Akums reported profit after tax (PAT) at 0.79 crore versus ₹97.82 crore profit in FY23 and ₹250.87 loss in FY22. However, revenue rose by 13.8% to ₹4,212.21 crore from ₹3,700.93 in FY23 and ₹3,694.52 crore in FY22. The company generated around 75% of its revenue from CDMO business, 20% from branded and generic formulations, and around 5% from API (Active Pharmaceutical Ingredient) business.