Delhi-based pharma company Akums Drugs and Pharmaceuticals has set a price band for its upcoming initial public offering (IPO) at ₹646-679 per share, which will open for subscription on July 30. The anchor book will open for a day on July 29, while the issue will close on August 1. The tentative date for listing of shares of Akums Drugs on the BSE and NSE is August 6.
Promoted by Sanjeev Jain and Sandeep Jain, the pharmaceutical contract development and manufacturing organisation (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 lot size of the IPO 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.
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.
About Akums Drugs
Incorporated 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 Pharm, UCB, and The Mom’s Co, among its key clients for CDMO business.
For CDMO business, the company operates 10 manufacturing units, some of which have been accredited by global regulatory agencies such as the European Good Manufacturing Practice, with a cumulative formulations manufacturing capacity of 49.21 billion units annually, as of September 30, 2023. Besides, its two additional manufacturing units for CDMO business is expected to become operational in the financial year 2025.
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.
As of March 31, 2024, total borrowing of the company stood at ₹491.56, declining from ₹536.97 crore in the same period last year.
Scope of CDMO market in India
Given the increasing domestic market growth, the Indian domestic CDMO market, which is fairly nascent in comparison to export-driven markets, is projected to grow 14% between FY23 and FY28, nearly doubling its historical growth rate and achieving 1.5X growth in the overall formulations market.
Currently, Indian CDMO is a fragmented and unorganised market characterised by several small-scale, privately owned businesses and only a handful of large-scale companies dominating the market. The trend suggests that CDMOs are consolidating to achieve large production capacities, broad portfolio capabilities, and wide service portfolios to meet an increase in outsourcing demand.
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