Akums Drugs And Pharmaceuticals IPO: All You Need To Know

Akums Drugs and Pharmaceuticals Ltd. plans to raise up to Rs 1,856.74 crore through an initial public offering set to open on July 30. It is a combination of fresh issue of 1 crore shares aggregating to Rs 680 crore, and an offer for sale of 1.73 crore shares aggregating to Rs 1,262.83 crore.

The company has set a price band of Rs 646-679 per share, with a face value of Rs 2 each, for the issue that closes on Aug. 1.

Issue Details

• Issue opens: July 30.

• Issue closes: Aug. 1.

• Issue price: Rs 646 to Rs 679 per share.

• Total issue size: Rs 1,856.74 crore.

• Bid lot: 22 shares.

• Listing: BSE and NSE.

Use Of Proceeds

The company proposes to utilise the net proceeds towards funding of the following:

• Repayment or prepayment of indebtedness of the company and its subsidiaries, namely Maxcure Nutravedics Ltd. and Pure and Cure Healthcare Pvt.

• Funding incremental working capital requirements.

• Pursuing inorganic growth initiatives through acquisitions.

• General corporate purposes.

Business

The company is a pharmaceutical contract development and manufacturing organisation, offering a comprehensive range of pharmaceutical products and services in India and overseas.

It owns the intellectual property for the manufacturing processes of several formulations, and their core business is focused on providing end-to-end product development and manufacturing solutions to clients.

Some of their other services include formulation research and development, preparation and filing of regulatory dossiers in the Indian and global markets, and other testing services.

As a CDMO, the company produces an extensive range of dosage forms, including tablets, capsules, liquid orals, vials, ampoules, blow-filled seals, topical preparations, eye drops, dry powder injections, and gummies, among others.

Akums is the largest CDMO by production capacity, serving Indian pharma markets in FY24 (among assessed peers). It has 10 manufacturing plants, with a total formulation production capacity of 49.23 billion units annually as of FY24, accounting for 4.5 times of its second-largest peer by capacity (among assessed peers).

Additionally, Akums is expected to add two manufacturing units for the CDMO business.

The company is also engaged in the manufacturing and sale of branded pharmaceutical formulations and active pharmaceutical ingredients.

Financials

The financials of the company were impacted in FY22-24 due to provisioning for buyback of shares from the investor. However, this requirement was waived off on May 29, 2024, as the company provided exit to the investor through IPO and the built-up liability is set to be reversed, according to management.

Key Risks

• The company's manufacturing units and research and development centres are concentrated in Haridwar, Uttarakhand, and they are exposed to risks originating from economic, regulatory, political and other changes in this region—including natural disasters—which could adversely affect the company's business, results of operations and financial condition.

• The company relies on domestic and international third-party suppliers for the supply of raw materials and any delay, interruption or reduction in such supply could adversely affect their business, results of operations, financial condition and cash flows.

• The company has had negative cash flows from investing activities during the fiscal 2024. Negative cash flows over extended periods, or significant negative cash flows in the short-term, could affect its ability to operate business and implement growth plans.

• The active pharmaceutical ingredient manufacturing unit of its subsidiary Pure and Cure Healthcare has been subject to regulatory action by the Punjab Pollution Control Board, in relation to non-compliance with conditions stipulated in the environmental approvals granted.