Akums Drugs & Pharmaceuticals IPO opens: Should you invest?

Akums Drugs & Pharmaceuticals IPO: Akums Drugs & Pharmaceuticals share sale via initial public offering (IPO) opened on Tuesday, July 30. The company is offering shares in a price band of Rs 646-679 per share. The company aims to raise Rs 1,856.74 crore through the IPO, comprising a fresh issue of Rs 680 crore and an offer for sale worth Rs 1,176.74 crore.

Key details of Akums Drugs & Pharmaceuticals IPO:

• Price Band: Rs 646 to Rs 679 per share
• Lot Size: Investors can bid for a minimum of one lot (22 shares) and a maximum of 13 lots. At the upper end of the price band, one lot is priced at Rs 14,938.
• Allocation: 75 per cent of the shares are reserved for Qualified Institutional Buyers (QIBs), 15 per cent for high-net-worth individuals, and 10 per cent for retail investors.

The proceeds from the fresh issue will be utilised for various purposes, including the repayment or prepayment of the company's and its subsidiaries' debts, funding incremental working capital requirements, pursuing acquisitions for inorganic growth, and general corporate purposes.

Founded in 2004, Akums Drugs and Pharmaceuticals Limited is a contract development and manufacturing organisation (CDMO) that provides a comprehensive range of pharmaceutical products and services both in India and internationally. The company offers end-to-end solutions, including product development, manufacturing, research and development (R&D), preparation and submission of regulatory dossiers, and other testing services. It also manufactures and sells branded drugs and active pharmaceutical ingredients (APIs).

Should you invest in Akums Drugs & Pharmaceuticals IPO

Financial services firm Tiare has issued an "avoid" rating on the IPO. It says:

• The company's bottom line and profitability margins have decreased in FY 2024 due to put option liabilities.
• Akums Drugs & Pharmaceuticals has a negative price-to-earnings (P/E) ratio of 13,525.93 times due to these liabilities, compared to the industry P/E of 49.14 times.
• The company reported a negative earnings per share (EPS) of -0.28 for FY 2024, as the total comprehensive income is negative.
• The company's performance lags behind its peers, although the management's overview is considered decent.