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Akums Drugs IPO: Subscribe or Skip?

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Akums Drugs IPO: Subscribe or Skip?

Akums Drugs IPO: Subscribe or Skip?

The highly anticipated Initial Public Offering (IPO) of Akums Drugs and Pharmaceuticals has opened for subscription, aiming to raise an impressive Rs 1,856.74 crore. This significant event in the financial market includes a fresh issue of 1 crore shares worth Rs 680.00 crore and an offer for sale of 1.73 crore shares amounting to Rs 1,176.74 crore. The subscription period for the IPO closes on August 1, 2024, with the allotment expected to be finalized by August 2, 2024. Investors can look forward to the shares being listed on the BSE and NSE on August 6, 2024.

IPO Details

Price Band and Lot Size

The price band for the Akums Drugs and Pharmaceuticals IPO is set between Rs 646 and Rs 679 per share. The minimum lot size for an application is 22 shares, which requires a minimum investment of Rs 14,938 for retail investors.

For Small and Medium-sized Investors (sNII), the minimum investment required is Rs 209,132 for 14 lots, equating to 308 shares. For Big NII (bNII) investors, the minimum investment is Rs 1,000,846 for 67 lots, totaling 1,474 shares.

Investment Insights

Investing in an IPO involves evaluating the company’s market position, growth prospects, and valuation. Here’s a closer look at the Akums Drugs and Pharmaceuticals IPO from the perspective of various financial experts.

Market Leadership and Growth Prospects

Akums Drugs and Pharmaceuticals holds a prominent position in the market, which bodes well for its future growth. The company’s leadership in the pharmaceutical sector is a positive indicator for potential investors. The IPO is valued at a Price-to-Earnings (P/E) ratio of approximately 28x, excluding adjusted put-call liabilities. This valuation reflects the company’s growth potential and market leadership.

Caution Advised by Analysts

Swastika Investmart Ltd. advises a cautious approach to the IPO. While the company’s market leadership and growth prospects are encouraging, investors are urged to carefully assess the risks involved before making an investment decision.

Use of IPO Proceeds

A significant portion of the IPO proceeds, over 60%, is intended to provide exits for existing stakeholders. This raises concerns about the company’s focus on short-term gains over sustainable development. Only 35% of the proceeds are allocated for reinvestment, which may limit the company’s ability to improve operations and drive long-term growth.

Promoters’ Long-Term Vision

Tarun Singh, MD of Highbrow Securities, emphasizes the need for investors to consider the promoters’ long-term vision and commitment. While Akums Drugs and Pharmaceuticals shows promise with its strategic advantages and growth potential, the promoters’ short-term focus and operational inconsistencies pose potential risks.

Aggressive Pricing

Based on FY24 adjusted earnings, the IPO is priced at a P/E ratio of 29.79, which some analysts consider aggressively priced. Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, predicts a listing price of around Rs 880-900 per share, which could result in a listing gain of approximately 30%.

Conclusion

The Akums Drugs and Pharmaceuticals IPO presents a compelling opportunity for investors, given the company’s market leadership and growth prospects. However, potential investors should carefully evaluate the risks associated with the promoters’ short-term focus and the aggressive pricing of the IPO. A cautious approach is recommended, with thorough consideration of the company’s long-term vision and operational strategies.

Disclaimer: The opinions, recommendations, and insights provided by experts and brokerages in this article are their own and do not necessarily represent those of OSTP Media. We recommend consulting a qualified broker or financial advisor before making any investment or trading decisions.

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