Akums Drugs and Pharma shares jump 8% post listing. Should you buy, sell or hold?

Akums Drugs and Pharmaceuticals shares jumped 8% to Rs 784.6 following their debut on the exchanges on Tuesday. The stock debuted at Rs 725 on the NSE and BSE, reflecting a premium of Rs 46 or 7% over the IPO price of Rs 679.

However, the listing was below expectations, with shares previously trading at a grey market premium (GMP) of Rs 140.

“Akums Drugs and Pharmaceuticals made a subdued debut on the stock market. While the IPO received a strong subscription of 63.44 times and the initial market buzz was positive, the actual listing fell short of expectations, likely influenced by the prevailing market volatility,” said Shivani Nyati, Head of Wealth of Swastika Investmart.

“The company’s strong fundamentals and market position offer potential for long-term growth, but investors should carefully assess the risks and market volatility. Investors with a long-term view may hold their position by keeping a stop loss at its issue price,” Nyati added.

CA Tapan Doshi, SEBI Registered Analyst & founder of Thoughtful Investors Hub, said, “The IPO was well-received due to its reasonable pricing, and Akums’ strong fundamentals suggest potential for long-term growth. For those looking for quick returns, booking profits right after listing might be advisable. However, for long-term investors, Akums remains a strong buy given its leading position as a Contract Development and Manufacturing Organization (CDMO) in India’s pharmaceutical sector.””Once market conditions stabilize, Akums could offer substantial gains,” Doshi added.The IPO saw substantial interest, with an overall subscription of 63.5 times. Analysts had previously recommended the IPO as the issue was available at reasonable valuations.Akums Drugs and Pharmaceuticals is a contract development and manufacturing organization (CDMO), offering a comprehensive range of pharmaceutical products and services in India and overseas.

The company carries out operations across the pharmaceutical value chain, operating as a CDMO, marketer of formulations, and manufacturer of APIs.

The net proceeds of the IPO will be utilized by the company towards the repayment/ prepayment of indebtedness of the company and its subsidiaries, funding incremental working capital requirements, pursuing inorganic growth initiatives through acquisitions and general corporate purposes.

In FY24, the company’s revenue from operations grew 14% year-on-year to Rs 4,178 crore from Rs 3655 crore in the preceding financial year. Meanwhile, profit after tax declined drastically to Rs 79 lakh, compared with Rs 97.8 crore a year ago.

Axis Capital, ICICI Securities, Citigroup Global Markets India and Ambit acted as the book running lead managers to the issue, while Link Intime India was the registrar.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)