The highly anticipated public offering for Akums Drugs and Pharmaceuticals, or IPO, is now accepting subscriptions from Tuesday, July 30, through Thursday, August 1. This IPO consists of an offer-for-sale (OFS) of 17,330,435 equity shares by the promoters and other investors, valued at ₹1,857 crore, in addition to a fresh issue at ₹680 crore. Here is a thorough study of the IPO’s salient features, subscription status, and professional opinions while the market watches with bated breath.
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Important Dates and Offer Specifics
The IPO for Akums Drugs began on July 30 and ends on August 1. A minimum of 22 equity shares are up for grabs, and subsequent bids must be placed in multiples of 22. The price range for each share is ₹646–₹679. Akums Drugs demonstrated considerable pre-IPO interest by raising ₹829 crore from anchor investors before to the public subscription.
Interest from Investors and Subscription Status
The IPO attracted a tremendous amount of investor interest on its first day, as it was fully subscribed. In less than an hour, the retail section was fully packed. The total subscription status at the conclusion of the day was 1.37 times. Retail investors subscribed at a pace of 3.35 times, demonstrating strong interest. The employee segment saw a subscription of 1.07 times, but the non-institutional investor group saw 1.96 times. 43% of the shares were acquired by Qualified Institutional Buyers (QIBs), demonstrating their optimism in the company’s future.
Breakdown of Allocation
With 75% designated for QIBs, 15% for non-institutional investors, and 10% for retail investors, the allocation is set up to benefit institutional investors. The stability and attraction of the IPO are increased by this strategic allocation, which guarantees a balanced participation from all investor categories.
Background of the Company and Its Position in the Market
Founded in 2004, Akums Drugs & Pharmaceuticals is one of India’s leading contract development and manufacturing organizations (CDMOs). The company serves both domestic and foreign markets by providing a broad range of pharmaceutical products and services. Akums has made a name for itself in the pharmaceutical sector by taking advantage of its broad clientele and robust R&D skills.
Reviews and Advice from Experts
Superior Brow Securities
Highbrow Securities’ managing director, Tarun Singh, singles out Akums Drugs as a top CDMO with a strong track record and significant market share. He does, however, issue a warning, pointing out that the main objective of the IPO is to finance inorganic growth through acquisitions. There are doubts regarding the company’s dedication to long-term growth given that more than 60% of the proceeds are designated for the departures of current stockholders. Concerns concerning the promoters’ commitment to sustainable development are raised by the fact that only 35 percent of the funds are set aside for reinvestment.
Analysis of Stoxbox
Akums Drugs is commended by Stoxbox for having a solid presence in both the domestic and foreign CDMO sectors. The company’s strong manufacturing skills and strategic R&D and global expansion ambitions provide it a competitive edge. The firm, which values the IPO at a fair P/E of 29.7x, excluding adjusted put-call liabilities, advises investing in the offering.
Financial Specifics of the IPO and Use of Proceeds
Investors and promoters would sell a large number of shares in the OFS, while the IPO’s fresh issue is expected to earn ₹680 crore. In particular, Sanjeev and Sandeep Jain, the promoters, would individually dispose 15.12 lakh shares, while Ruby QC Investment Holdings Pte Ltd will sell 1.43 crore shares. The money raised will go toward increasing working capital needs, supporting inorganic growth projects, and debt repayment.
The estimated listing price and the grey market premium (GMP)
The GMP for Akums Drugs’ IPO is currently +177, indicating a high level of demand in the gray market. This implies that the listing price would be around ₹856 per share, which is almost 26.07% more than the ₹679 upper end of the IPO pricing range. The good sentiment around the IPO is reflected in the GMP, which represents investors’ willingness to pay more than the issue price.
In summary
The firm’s strong market position and development potential make the Akums Drugs IPO an appealing proposition for investors. Potential investors should take into account the conflicting messages presented by the emphasis on stakeholder exits and the use of proceeds, though. As usual, before making any investing decisions, it is best to speak with licensed financial professionals.
Please note that the opinions and suggestions expressed in this article are based on data from brokerage firms, professionals, and individual analysts. The views expressed in them are not those of this magazine. Before making any investing decisions, please seek the advice of qualified professionals.
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