Akums Drugs IPO: Final Bidding Today—Check GMP, Subscription Status, and Key Details
Akums Drugs and Pharmaceuticals has launched its initial public offering (IPO) amidst a bullish market, with the Nifty 50 approaching the 25,000 mark. The IPO has garnered significant attention from investors, reflecting a robust subscription status. On the second day of bidding, BSE data revealed that Akums Drugs and Pharmaceuticals IPO was subscribed 4.43 times. Retail investors were particularly enthusiastic, with their quota being subscribed 8.98 times, while non-institutional investors’ portion was subscribed 8.48 times. The section designated for qualified institutional buyers (QIBs) saw a 96% subscription, and the employee portion was subscribed 2.23 times.
Day One Response: A Strong Start
The Akums Drugs IPO saw a remarkable response from investors right from the outset. On the first day, the IPO was completely subscribed within an hour of its launch, highlighting the strong interest in the pharmaceutical company’s shares. The public subscription period began on July 30 and concluded on August 1. The issue price band was set between ₹646 and ₹679 per share. Prior to the public subscription, the company secured ₹829 crore from anchor investors.
Detailed Subscription Analysis
Retail Investors and Non-Institutional Investors
The IPO subscription status was impressive, with the retail investor portion subscribed 3.35 times more than the non-institutional investor segment, which itself had a 1.96 times subscription rate. This shows a broad-based interest across different investor categories. Qualified institutional buyers (QIBs) accounted for 43% of the total subscriptions, while the employee component received 1.07 times the expected subscriptions. The company designated 75% of the issue for Qualified Institutional Buyers (QIBs), 15% for non-institutional investors, and 10% for retail investors. Investors could bid for a minimum of 22 equity shares and in multiples thereof.
Company Background and Clientele
Founded in 2004, Akums Drugs & Pharmaceuticals operates as a contract development and manufacturing organization (CDMO). The company provides a wide range of pharmaceutical products and services both domestically in India and internationally. Key clients include prominent names such as 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 (The Mom’s Co).
Brokerage Reviews and Market Sentiment
Swastika Investmart’s Perspective
Swastika Investmart noted that while Akums Drugs has demonstrated significant top-line growth, its profitability has been impacted by non-operational factors such as fair value adjustments. Despite these challenges, the company’s established market position and growth potential bode well for its long-term prospects. The brokerage highlighted key risks, including regulatory scrutiny, potential production or quality control issues, and geographic concentration, which investors should consider seriously.
The IPO is valued at a fair price-to-earnings (P/E) ratio of approximately 28x, excluding adjusted put-call liabilities. Swastika Investmart advises a cautious approach, recommending that investors weigh the risks and potential rewards before making a decision.
Insights from Dilip Davda of Chittorgarh.com
Dilip Davda, a contributing editor at Chittorgarh.com, acknowledged Akums Drugs’ leadership position in the CDMO sector, with a loyal clientele comprising several blue-chip domestic and international pharmaceutical companies. Based on FY24 results, the IPO is priced at a P/E ratio of 29.79, excluding put-call obligations. Davda considers the issue to be fully priced and suggests that investors with a medium to long-term horizon may find it a suitable investment.
IPO Details and Use of Proceeds
The Akums Drugs IPO, valued at ₹1,857 crore, includes a fresh issue of ₹680 crore and an offer-for-sale (OFS) of 17,330,435 equity shares by the promoters and other investors. In the OFS, Ruby QC Investment Holdings Pte Ltd plans to offload 1.43 crore shares, while promoters Sanjeev and Sandeep Jain will each sell 15.12 lakh equity shares.
The net proceeds from the fresh issue will be used to settle obligations of the company and its subsidiaries, including Pure and Cure Healthcare, Maxcure Nutravedics, and Pure. The funds will also facilitate inorganic growth projects and address increased working capital requirements. The IPO is being managed by ICICI Securities Ltd, Axis Bank Ltd, Citigroup Global Markets India Private Ltd, and Ambit Private Ltd, with Link Intime India Private Ltd serving as the registrar.
As of today, the grey market premium (GMP) for the Akums Drugs and Pharmaceuticals IPO is +₹170, suggesting that shares are trading at a ₹170 premium in the grey market, according to investorgain.com. With this GMP and the upper end of the IPO price band, the estimated listing price for Akums Drugs shares is ₹849 each, reflecting a 25.04% premium over the IPO price of ₹679.
The grey market premium reflects investors’ willingness to pay more than the issue price, indicating strong demand and positive market sentiment.
Conclusion
The Akums Drugs IPO has attracted significant interest from a wide range of investors, underscoring the company’s strong market position and growth potential. Despite some challenges and risks, the overall response has been positive, suggesting confidence in the company’s future prospects. As the subscription period concludes, it will be interesting to see how the market reacts to the IPO’s listing and subsequent performance.
Disclaimer: The opinions and recommendations provided are those of individual analysts, experts, and brokerage firms, and do not reflect the views of OSTP Media. We recommend that investors consult certified professionals before making any investment decisions.
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