Akums Drugs & Pharma IPO subscribed 40x on Day 3 so far; QIB portion booked 50 times

The initial public offering (IPO) of Akums Drugs and Pharmaceuticals continued to attract strong investor response during the third and final day of the bidding process as institutional participants joined the party. The issue ended Day 1 with over 1.35 times subscription and was booked 4.4 times by day 2.
 

The New Delhi-based Akums Drugs is selling its shares in the price band of Rs 646-679 apiece. Investors can apply for a minimum of 22 shares and its multiples thereafter. It is looking to raise Rs 1,,856.74 crore via IPO, which includes a fresh share sale of Rs 680 crore and an offer-for-sale (OFS) of 1,73,30,435 equity shares.
 

According to BSE data, the investors made bids for 60,77,48,878 equity shares, or 40.08 times, compared to the 1,51,62,239 equity shares offered for the subscription by 3.10 pm on Thursday, August 1. The three-day bidding for the issue, which kicked off on Tuesday, July 30, concludes today.
 

The allocation for qualified institutional bidders (QIBs) was subscribed 49.69 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 37.84 times. retail investors portion was booked 17.92 times. However, the quota set aside for employees saw bids for 3.55 times as of the time.
 

Akums Drugs and Pharmaceuticals is a pharmaceutical contract development and manufacturing organization (CDMO) which offers a comprehensive range of pharma products and services in India and overseas. It is engaged in the manufacture and sale of branded drugs and active pharmaceutical ingredients (APIs).
 

The grey market premium of Akums Drugs & Pharma has taken a hit following the bidding for the first day. Last heard, the company was commanding a premium of Rs 165-170 in the unofficial market, suggesting a listing pop of about 25 per cent for the investors. However, the premium in the grey market stood around Rs 210-215 on the first day of the bidding.
 

Brokerage firms are mostly positive on the issue, suggesting investors to subscribe to it for a long-term citing experience management, strong business model, growth potential, reasonable valuations and solid leadership in the domestic markets. On the other hand, they are skeptical of low margins, regulatory scrutiny and financials of the API business.
 

Akums Drugs is a leading CDMO player with a strong focus on the Indian pharmaceutical market. The company has significantly expanded its domestic market share, solidifying its position as the largest third-party pharma manufacturing company in India, said SMC Global, which has given it two-star ratings out of five.
 

"However, the company's concentrated operations in Haridwar, Uttarakhand, expose it to potential economic, regulatory, political, and natural disaster risks that could impact its business performance and financial stability. Despite these risks, Akums' strong market position and growth trajectory make it a potentially attractive investment for long-term investors," it added.
 

Ahead of its IPO, Sanstar raised Rs 828.78 crore from 12 anchor investors as it allocated 1,22,05,912 shares at a price of Rs 679 apiece. Akums Drugs and Pharma reported a profit of 0.79 crore with a revenue of Rs 4,212.21 crore for the year ended on March 31, 2024. The company clocked a net profit of Rs 97.82 crore with a revenue of Rs 3,700.93 crore in the financial year 2022-23.
 

Rajan Shinde, Research Analyst at Mehta Equities believes that Akums Drugs gives investors an opportunity to invest in a prominent CDMO player distinguished as the largest India-focused CDMO by revenue, production capacity and client base. The company's comprehensive product offerings and extensive manufacturing capabilities,
 

"The issue is asking for a marketcap of Rs 10,687 crore, given the anticipated growth in the Indian CDMO market, along with Akums expanding global footprint and strategic move into API manufacturing, further enhancing its long-term prospects. Hence, we recommend investors to 'subscribe' to Akums Drugs and Pharmaceuticals," he said.
 

Akums Drugs and Pharma has reserved shares worth Rs 15 crore for its eligible employees, who will get a discount of 64 per share. 75 per cent of the net offer has been reserved for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the net offer. Remaining 10 per cent of the net offer shall be allocated for retail investors.
 

Axis Bank, ICICI Securities, Citigroup Global Markets India and Ambit are the book running lead managers of the Akums Drugs and Pharmaceuticals IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE, with August 6, Tuesday.