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Akums Drugs and Pharmaceuticals is set for a promising debut on August 6, with shares expected to open 10-15% higher, according to market experts. This optimistic forecast comes despite the prevailing market volatility. The company’s ₹1,857-crore Initial Public Offering (IPO) was met with an overwhelming response, being oversubscribed 63.56 times, reflecting robust investor confidence amid current market pressures.
The IPO comprised a fresh issuance of shares worth ₹680 crore and an offer-for-sale totaling ₹1,176.7 crore by promoters Sanjeev and Sandeep Jain, alongside investor Ruby QC Investment Holdings. Qualified institutional buyers (QIBs) showed significant enthusiasm, subscribing 90.09 times their allocated portion. Non-institutional investors followed with a 42.21 times subscription rate, while retail investors oversubscribed their portion by 21.3 times.
As of March 2024, Akums Drugs has increased its domestic market share to 30.2%. Despite an aggressive price-to-earnings ratio of 29.79, experts predict that the shares will list at around ₹780-800, which represents a 15-18% gain over the issue price of ₹679.
Prashanth Tapse from Mehta Equities anticipates a listing gain of 10-15%, while Prathamesh Masdekar of StoxBox expects a premium of about 16%. The grey market also indicates an 8-15% premium over the issue price, underscoring strong pre-listing interest.
Although Akums Drugs experienced a decline in profit for FY24 to ₹0.79 crore from ₹97.8 crore in the previous year, its revenue increased significantly to ₹4,178.2 crore. The company plans to use the IPO proceeds for debt repayment, meeting incremental working capital needs, and supporting growth initiatives. This strategic use of funds aims to strengthen the company’s financial position and drive future growth.