Established in 2004, Akums Drugs and Pharmaceuticals Limited is a pharmaceutical contract development and manufacturing organization ('CDMO') offering a comprehensive range of pharmaceutical products and services in India and overseas. As one of the leading CDMOs in India, they own the intellectual property for the manufacturing processes of several of the formulations, and the core business is focused on providing end-to-end product development and manufacturing solutions to the clients. Some of the other services include formulation research and development ('R&D'), preparation and filing of regulatory dossiers in the Indian and global markets, and other testing services. In addition to the core CDMO business, they are also engaged in the manufacturing and sale of branded pharmaceutical formulations and active pharmaceutical ingredients ('APIs'). As a CDMO, they produce 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. During the Financial Year 2024, they had a market share of 30.2% of the Indian domestic CDMO market by value, which increased from 26.7% during the Financial Year 2021. Since the inception, they have manufactured 4,146 commercialised formulations across over 60 dosage forms. During the Financial Year 2024, they manufactured formulations for 26 of the leading 30 pharmaceutical companies in terms of sales in India. For the CDMO business, they operate 10 manufacturing units, with a cumulative formulations manufacturing capacity of 49.23 billion units annually, as of March 31, 2024. Further, they expect the new injectable facility to be operational in Financial Year 2025. Some of the manufacturing units have been accredited by various global regulatory agencies such as the European Good Manufacturing Practice ('EU-GMP'), the World Health Organization Good Manufacturing Practice ('WHO-GMP') and the United States National Sanitation Foundation ('US NSF'). During the Financial Years 2024, 2023 and 2022, the manufacturing units were subject to 58 inspections by regulators and 527 audits by the clients. As of March 31, 2024, the client base for the CDMO business comprised 1,524 Indian and multinational pharmaceutical and wellness companies, increasing from 1,386 as of March 31, 2022. As of March 31, 2024, key clients for the CDMO business include Alembic Pharmaceuticals, Alkem Laboratories, Blue Cross Laboratories, Cipla, Dabur India, Dr. Reddy’s Laboratories, Hetero Healthcare, Ipca Laboratories, Mankind Pharma, MedPlus Health Services, Micro Labs, Mylan Pharmaceuticals, Natco Pharma, Sun Pharmaceutical Industries, UCB, and Amishi Consumer Technologies (The Mom’s Co), among others. In addition to the core CDMO business, they actively engage in marketing the own branded formulations in India and across global markets, and have established a domestic and international presence through the Subsidiaries, Akumentis and Unosource, respectively. Through Akumentis, they focus on therapy areas such as gynaecology, cardiology, orthopaedic and paediatric. Utilizing the field force of 1,532 individuals, as of March 31, 2024, they sell over 140 brands. Through Unosource, they focus on therapy areas such as anti-infectives, analgesics, central nervous system, and gynaecology. As of March 31, 2024, the international presence extends across 65 countries, and the key clients include Allegens (Vietnam), Ambica International (Philippines), Caferma SAC (Peru), JDS (Myanmar), Master Pharma (Cambodia), Olainfarm (Latvia), Pharma Apex (Myanmar), Planet Pharmaceutical (Tanzania), and Unisel (Kenya), among others. As of March 31, 2024, they operate four dedicated R&D units and engaged 406 R&D scientists across the businesses. Two of the R&D units are approved by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. As of March 31, 2024, they have obtained 1,448 trademarks across various dosage forms and formulations. Further, as of March 31, 2024, they have procured 927 DCGI approvals and five patents. As of the date of this Red Herring Prospectus, they have received approval from FSSAI for 923 formulations. As per financial performance, Akums Drugs and Pharmaceuticals Limited has posted total income / net profits of Rs 3,694.52 Cr / Rs (250.87) Cr (FY22), Rs 3,700.92 Cr / 97.81 Cr (FY23) and Rs 4,212.20 Cr / Rs 0.79 Cr (FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs (0.87) and average RoNW of (0.57)% for last three fiscals. Issue is priced at a P/BV of 13.69 as per NAV of Rs 49.59/- as on 31.03.24. If we attribute latest earnings of FY22, FY23, and FY24 on fully diluted equity post issue, then asking price is at a P/E of around (42.59), 109.24, and 13,525.94 respectively, which looks very aggressively priced. As per RHP, comparison between listed peers is given in above table. On BRLM's front, Four lead managers are associated with this IPO, and have handled around 92 IPOs ( Mainboard and SME ) in last three fiscals. ICICI Securities Limited: This is 45th IPO from this BRLM. From last 10 IPOs, two opened below issue price on the day of listing. As of now, from last 10 IPOs, two are trading below issue price. (As on 25.07.23) Axis Bank Limited: This is 37th IPO from this BRLM. From last 10 IPOs, two opened below issue price on the day of listing. As of now, from last 10 IPOs, one is trading below issue price. (As on 25.07.23) Citigroup Global Markets India Private Limited: This is 10th IPO from this BRLM. From last 9 IPOs, two opened below issue price on the day of listing. As of now, from last 9 IPOs, one is trading below issue price. (As on 25.07.23) Ambit Private Limited: This is 4th IPO from this BRLM. From last 3 IPOs, all opened above issue price on the day of listing. As of now, from last 3 IPOs, all are trading above issue price. (As on 25.07.23) As per financials, Akums Drugs and Pharmaceuticals Limited has shown good results, RoNW is (0.57)% and P/E is respectively (42.59), 109.24, and 13,525.94 as per FY22, FY23, and FY24 earnings. So, issue looks very aggressively priced. But it can be expected that company will be able to generate industry average margins in next couple of years. Company is in manufacturing of plant based speciality products and ingredient solutions for food, animal nutrition and other industrial applications, which is highly competitive and fragmented business segmented. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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