| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 646 to ₹ 679 | 22 | 30th July, 2024 – 01st Aug, 2024 | ₹ 1,856.74 Cr |
Company Overview
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 APIs. The other services include R&D, filing regulatory dossiers in the Indian and global markets, and other testing services. Akums Drugs and Pharmaceuticals is the largest India-focused CDMO in revenue terms, production capacity, and clients served during FY23. The company had a market share of 30.2% of the Indian domestic CDMO market by value in FY24, which increased from 26.7% during FY21. The company has procured five patents for various dosage forms, formulations and processes as of March 31, 2024. Additionally, the company holds 1,432 registered trademarks and has 506 pending trademark applications in several classes. The company operates 12 manufacturing units (8 in Haridwar, Uttarakhand; 1 in Kotdwar, Uttarakhand; 1 unit in Baddi, Himachal Pradesh; and 1 unit in each of Dera Bassi and Lalru, Punjab). Various global regulatory agencies have accredited some of the manufacturing units. The CDMO business client base comprises 1,524 Indian and MNC pharmaceutical and wellness companies as of March 31, 2024. The diverse client base includes pharmaceutical companies, nutraceutical companies, cosmo-derma companies, wellness companies, e-commerce companies, healthcare providers and central and state government entities. The company manufactured formulations for 26 of the leading 30 pharmaceutical companies in terms of sales in India in FY24.
Objects of the issue:
The net proceeds from the fresh issue will be used towards the following purposes:
- Repayment/Prepayment of certain borrowings of subsidiaries namely, Maxcure Nutravedics and Pure and Cure Healthcare Pvt. Ltd;
- General corporate purposes.
Investment Rationale:
Largest CDMO serving the Indian pharmaceutical industry with established track record
The company is the largest India-focused CDMO in revenue terms, production capacity, and clients served during FY23 (among CDMOs assessed by F&S). The company commenced operations in 2004 and offers a comprehensive range of pharmaceutical products and services. The company, along with its subsidiaries, operates 12 manufacturing units with a cumulative formulations manufacturing capacity aggregating to 49.23 bn units annually and produces a wide range of dosage forms, including tablets, hard and soft gelatin capsules, liquid orals, sachets, vials, ampoules, form fill seals, topical preparations, eye drops, dry powder injections, rotacaps and gummies, among others. Since its inception, Akume Drugs has manufactured 4,146 commercialized formulations across 60 dosage forms. During FY24, they had a market share of 30.2% by value in the Indian domestic CDMO market. The pharmaceutical industry is also subject to stringent regulatory oversight and compliance requirements, which necessitate extensive expertise and experience. The company’s track record of regulatory compliance underscores its success in operating in the complex regulatory landscape, positioning itself as a trusted and long-term resource to the pharmaceutical industry. With increased growth, the Indian domestic CDMO market is forecast to grow at a CAGR of 14.3% between FY24 and FY28. The company has demonstrated robust growth and delivered superior returns led by its large scale in capacity, formulation capability, and R&D competency, which allows it to extract a large proportion of segment growth as pharmaceutical sponsors look for companies with scale to ensure a reliable supply of large quantities.
Diverse client base with longstanding CDMO relationships aid business performance
The company’s CDMO business comprises 1,524 Indian and multinational pharmaceutical and wellness companies as of March 31, 2024, as opposed to 1,386 as of March 31, 2022. The company’s client base for CDMO business includes a diverse range of clients such as pharmaceutical companies, nutraceutical companies, cosmeceuticals companies, wellness companies, e-commerce companies, healthcare providers and central and state government entities. During FY24, Akume Drugs manufactured formulations for 26 of the leading 30 pharmaceutical companies in terms of sales in India. The company offers differentiated dosage forms. By leveraging an understanding of the regulatory environment, it assists clients through a dedicated team of experts, guiding them through the intricacies of evolving regulatory issues and requirements. Furthermore, they have benefitted from repeat orders in the past five years from 38 of the 50 most significant clients in revenue for CDMO business as of March 31, 2024. The company’s client relationships have strengthened over the years, exemplifying the reliability, expertise and cost efficiencies.
Valuation
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 carries out operations across the pharmaceutical value chain, operating as a CDMO, marketer of formulations, and manufacturer of APIs. Akums Drugs’ presence in the Indian pharmaceutical landscape is augmented by a strong domestic CDMO presence and amplified through global export initiatives. This provides a competitive edge in the industry, allowing it to navigate growth opportunities across multiple markets. Moreover, adherence to global regulatory standards reinforces the ability to contribute to global healthcare solutions, expanding its footprint in overseas markets. In addition to CDMO business, the company markets its branded formulations domestically and overseas, as well as the markets trade generics and products under its brand through distributors and alternative channels on a pan-India basis. Operating through subsidiaries, the company promotes its brands across India and other countries, primarily in Southeast Asia, Africa and the Commonwealth of Independent States. Akums Drugs and Pharmaceutical’s financial performance is driven by leveraging its leadership position to increase market share and consolidate position in the CDMO market, expand global presence through strategic initiatives, scale API business, focus on R&D and strong manufacturing capabilities, all of which have supported robust growth. Excluding adjusted put call liabilities, the IPO is valued at a reasonable P/E of 29.7x. Therefore, we recommend a SUBSCRIBE rating for the issue.
What is the Akume Drugs and Pharmaceuticals Ltd. IPO?
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.
How to apply for the Akume Drugs and Pharmaceuticals Ltd. IPO through Stoxbox?
To apply for the Akume Drugs and Pharmaceuticals Ltd. IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Akume Drugs and Pharmaceuticals Ltd. IPO open?
Akume Drugs and Pharmaceuticals Ltd. IPO is opening on 30th July 2024
What is the lot size of the Akume Drugs and Pharmaceuticals Ltd. IPO?
The Lot Size of Akume Drugs and Pharmaceuticals Ltd. IPO is 22 equity shares
When is the Akume Drugs and Pharmaceuticals Ltd. IPO allotment date?
The allotment Date for Akume Drugs and Pharmaceuticals Ltd. IPO is 02nd August 2024
When is the Akume Drugs and Pharmaceuticals Ltd.IPO listing date?
The listing Date for Akume Drugs and Pharmaceuticals Ltd. IPO is 06th August 2024
What is the minimum investment required for the Akume Drugs and Pharmaceuticals Ltd. IPO?
In the Retail segment the minimum investment required is Rs. 14,938
What is the maximum investment allowed for the Akume Drugs and Pharmaceuticals Ltd. IPO?
In the Retail segment the maximum investment requirement is Rs. 194,194
What are the risks associated with investing in the Akume Drugs and Pharmaceuticals Ltd. IPO?
- The company’s manufacturing or quality control concerns or inability to deliver products on a timely basis, or at all, could result in the cancellation of purchase orders, breaches of relevant agreements, and termination of accords by clients and distributors, which could hurt business, results of operations, financial condition and cash flows.
- The company relies on domestic and international third-party suppliers for raw materials. Any delay, interruption, or reduction in such supply could adversely affect the business, results of operations, financial condition, and cash flows.
- Any slowdown or shutdown in manufacturing and research and development operations could adversely affect the business, results of operations, financial condition, and cash flows.
When will the Akume Drugs and Pharmaceuticals Ltd.IPO shares be credited to my Demat account?
The Akume Drugs and Pharmaceuticals Ltd. IPO be credited to the account on allotment date which is 05th August 2024
Where can I find the Akume Drugs and Pharmaceuticals Ltd. IPO prospectus?
The prospectus of Sanstar IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to the Akume Drugs and Pharmaceuticals Ltd. IPO?
| IPO Open Date | Tuesday, July 30, 2024 |
|---|---|
| IPO Close Date | Thursday, August 1, 2024 |
| Basis of Allotment | Friday, August 2, 2024 |
| Initiation of Refunds | Monday, August 5, 2024 |
| Credit of Shares to Demat | Monday, August 5, 2024 |
| Listing Date | Tuesday, August 6, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on August 1, 2024 |
