Akums Drugs and Pharma shares surge by 7% after listing. Should you buy, sell, or hold?

Akums Drugs Shares

Akums Drugs Shares of Akum Drugs & Pharmaceuticals had a subdued debut on Dalal Street on Tuesday, listing at Rs 725 on the NSE, which is a modest 6.77% premium over its issue price of Rs 679. The stock also listed at the same price and premium on the BSE.

The listing performance of Akum Drugs and Pharma was anticipated. Prior to the listing, the shares were trading at a premium of Rs 40-50 each, indicating an expected listing gain of 5-6%.

Akum Drugs & Pharma’s IPO took place from July 30 to August 01. The shares were offered within a fixed price band of Rs 646-679 per share, with a minimum lot size of 22 shares. The IPO raised a total of Rs 1,856.74 crore, consisting of a fresh issue of up to Rs 680 crore and an offer-for-sale of up to 1,73,30,435 equity shares.

The IPO was significantly oversubscribed, with an overall subscription rate of 63.56 times. The quota for qualified institutional bidders (QIBs) was subscribed 90.09 times, non-institutional investors’ quota 42.21 times, retail investors’ quota 21.30 times, and the employee quota 4.27 times.

Founded in 2004, Akum Drugs and Pharma is a contract development and manufacturing organization (CDMO) that provides a wide range of pharmaceutical products and services both in India and internationally. The company is involved in the production and sale of branded drugs and active pharmaceutical ingredients (APIs).

Brokerage firms had a positive outlook on the IPO, recommending it for long-term investment. ICICI Securities, Citigroup Global Markets India, Axis Bank, and Ambit were the lead managers of the IPO, with Link Intime India acting as the registrar.

Akums is one of the leading Indian CDMOs with a strong focus on the domestic market. It captured 9.3% of the Indian domestic CDMO market by value in FY23 and 8.8% by volume in the IPM market. By FY24, the value market share rose to 10.0%, while the volume share remained stable at 8.7%. In the domestic CDMO market, Akums’ share increased to 30.2% by value in FY24 from 26.7% in FY21.

With a team of top-tier pharmaceutical professionals and standardized practices, Akums has earned both national and international recognition for its commitment to efficacy, safety, and quality. The company holds certifications such as WHO-GMP, ISO 9001:2015, ISO 14001:2015, ISO 50001:2018, ISO 45001:2018, and ISO 22000:2018. Additionally, it has received accreditations from international bodies including FDA Philippines, NMPB Sudan, NDA Uganda, and authorities in Cambodia, Indonesia, Nigeria, and Malawi, among others.

Share Price Target

Amit Goel, Co-Founder & Chief Global Strategist at Pace 360, shared his investment strategy for Akums Drugs shares following their listing. He noted, “We anticipated a listing gain of around 15 percent, expecting the share price to debut between 780 and 800 per share. Given the stock’s current trading range, we recommend that short-term investors book profits and exit.”

Prathamesh Masdekar, Research Analyst at StoxBox, provided guidance for medium- to long-term investors in Akums Drugs. He stated, “We have a favorable outlook on the company and suggest that those allocated shares hold them for the medium to long term.”

Prashanth Tapse, Senior Vice President (Research) at Mehta Equities, advises shareholders of Akums Drugs to retain their shares for the medium to long term. He stated, “Despite Akums Drugs‘ listing not meeting market expectations, we maintain a positive long-term outlook on India’s leading CDMO by revenue, production capacity, and client base. The company’s diverse product range, significant manufacturing capabilities, and strategic position in the pharmaceutical value chain offer a robust foundation for sustained growth.”

Tapse also noted that the post-listing valuation remains favorable, suggesting that it is advisable to “HOLD” Akums Drugs and Pharmaceuticals Ltd IPO for the long term.

“We anticipate that the market will assign a premium multiple to Akums for its leadership position, potentially leading to substantial post-listing gains,” Tapse concluded.