Akums Drugs and Pharmaceuticals IPO Listing: Stock debuts with 6% premium over IPO price

Akums Drugs and Pharmaceuticals IPO Listing

Akums Drugs and Pharma IPO Listing: Shares Surge with 6% Premium on Debut

The highly anticipated initial public offering (IPO) of Akums Drugs and Pharma has made a robust entrance into the Indian stock market.

This landmark event saw the company’s shares listed today at a notable 6.77% premium over the issue price, reflecting strong investor confidence and excitement surrounding the pharmaceutical sector.

IPO Details and Initial Performance

Akums Drugs and Pharma’s IPO, valued at ₹1,856.74 crore, was open for subscription from July 30 to August 1, 2024.

The offering attracted significant interest from investors, underscoring the company’s solid reputation and the high demand for its shares. The IPO was priced at ₹679 per share, which positioned it competitively within the market.

Upon its debut, the shares were listed at ₹725 on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). This initial listing price represented a 6.77% premium over the issue price, providing early gains for investors who participated in the IPO.

Throughout the trading session, the stock demonstrated remarkable momentum. By the end of the trading day, Akums Drugs and Pharma’s share price reached the upper circuit limit of ₹797.45 on the BSE, reflecting a substantial increase of 17.44% from the issue price.

This strong performance is indicative of the positive sentiment among investors and highlights the company’s promising outlook.

Employee Benefits and Allocation

A notable aspect of the Akums Drugs and Pharma IPO was the preferential allocation of shares to company employees.

Employees were offered shares at a discounted rate of ₹64 per share compared to the issue price. This discount provided an additional benefit to the company’s workforce, allowing them to participate in the growth and success of the company at a more advantageous price point.

Subscription Response and Allocation

The IPO received an overwhelming response from various categories of investors, reflecting strong market enthusiasm.

The overall subscription was oversubscribed by 63.44 times, highlighting the high level of interest in Akums Drugs and Pharma.

• Qualified Institutional Buyers (QIBs): The portion reserved for QIBs was oversubscribed by an impressive 90.09 times. This indicates a strong endorsement from institutional investors who are typically considered as sophisticated and informed market participants.
• Non-Institutional Investors (NIIs): The shares allocated to NIIs were subscribed 42.10 times. This robust interest from high-net-worth individuals and other non-institutional investors further underscores the strong demand for Akums Drugs and Pharma’s shares.
• Retail Investors: Retail investors, who make up the bulk of individual investors in IPOs, subscribed 20.80 times. This enthusiastic response reflects broad-based confidence in the company’s future prospects.
• Employees: The employee portion of the IPO was subscribed 4.14 times, showing strong participation from within the company.

Of the total amount raised through the IPO, ₹680 crore was generated through the issuance of new shares. The remainder of the funds was raised through the sale of 1,73,30,435 shares under the offer-for-sale (OFS) window.

The proceeds from the OFS will be distributed to the selling shareholders, while the funds from the new shares will be utilized by Akums Drugs and Pharma for a range of strategic purposes.

These include repaying existing debt, addressing increased working capital requirements, pursuing strategic acquisitions, and supporting general corporate activities.

Strategic Use of Funds

The funds raised from the IPO will play a crucial role in the company’s strategic growth plans. The repayment of debt will help to improve the company’s financial health and reduce its interest burden.

Increased working capital will enable Akums Drugs and Pharma to better manage its day-to-day operations and meet the growing demands of its clients.

Strategic acquisitions could expand the company’s capabilities and market presence, while the general corporate purposes will support ongoing operational needs and potential new ventures.

Company Background and Market Position

Founded in 2004, Akums Drugs and Pharma is a leading Contract Development and Manufacturing Organization (CDMO) in India.

The company has established a strong reputation for its expertise in pharmaceutical manufacturing, producing a diverse range of products including tablets, capsules, liquid medicines, vials, eye drops, and dry powder injections.

With a portfolio of 4-25 commercialized formulations across 60 dosage forms, Akums has positioned itself as a key player in the pharmaceutical industry.

The company has developed formulations for the top 30 pharmaceutical companies in India by revenue, underscoring its capability and reliability in delivering high-quality products.

Akums Drugs and Pharma’s commitment to excellence and innovation has helped it build long-term relationships with major pharmaceutical players, enhancing its market standing.

Financial Performance and Outlook

The financial performance of Akums Drugs and Pharma has seen significant fluctuations over recent years. In the fiscal year 2022, the company reported a net loss of ₹250.87 crore.

However, the company made a notable turnaround in FY2023, achieving a net profit of ₹97.82 crore. Despite this positive shift, the financial performance in FY2024 showed a decline, with net profit dropping to ₹79 lakh.

Despite these fluctuations, Akums Drugs and Pharma has demonstrated impressive revenue growth. For FY2024, the company reported revenue of ₹4,212.21 crore, reflecting a compound annual growth rate (CAGR) of more than 6%.

This revenue growth is indicative of the company’s strong market position and its ability to expand its business operations effectively.

Market Implications and Future Prospects

The strong performance of Akums Drugs and Pharma’s IPO and the subsequent surge in share price highlight the market’s confidence in the company’s future.

The positive listing gain and significant oversubscription suggest that investors see substantial value in the company’s stock.

Looking ahead, Akums Drugs and Pharma is well-positioned to leverage the funds raised through the IPO to further its strategic objectives.

The company’s focus on reducing debt, enhancing working capital, pursuing acquisitions, and supporting its general corporate needs will play a critical role in its future growth.

Additionally, the company’s established reputation and track record in the pharmaceutical manufacturing sector provide a solid foundation for continued success.

In conclusion, the successful listing of Akums Drugs and Pharma’s IPO marks a significant milestone for the company and reflects strong investor confidence.

The substantial gains experienced on the first trading day and the enthusiastic response from various investor categories underscore the positive outlook for the company.

As Akums Drugs and Pharma continues to execute its growth strategies and capitalize on market opportunities, it is poised to strengthen its position as a leading player in the pharmaceutical industry.