Shares of Akum Drugs & Pharmaceuticals are set for a muted listing at Dalal Street on Tuesday, thanks to the prevalent selloff in the broader markets and weak global sentiments. The severe carnage in the stock markets has diminished the listing prospects for the company, along with its grey market premium (GMP) over the last few days.
Last heard, shares of Akums Drugs and Pharma were commanding a premium of Rs 40-50 per share ahead of their listing, suggesting a listing pop of merely 5-6 per cent for the investors. However, it was around Rs 210-215 when the issue opened for bidding and even at Rs 170 when the issue closed for bidding.
Akums Drugs is a prominent CDMO player as its IPO garnered significant attention but the GMP has since moderated, reflecting a more cautious investor sentiment, said Shivani Nyati, Head of Wealth, Swastika Investmart. Investors should consider risks such as geographic concentration and regulatory hurdles, she said.
"Although the IPO's valuation appears reasonable at a P/E of approximately 28 times (excluding adjusted put call liabilities), the moderated GMP suggests a potential for a decent, rather than spectacular, listing," added Nyati.
The IPO of Akums Drugs & Pharma ran between July 30 and August 01. The company had offered its shares in the fixed price band of Rs 646-679 per share with a lot size of 22 shares. The company raised a total of Rs 1,856.74 crore from its IPO, which was entirely a fresh share sale of up to Rs 680 crore and an offer-for-sale (OFS) up to 1,73,30,435 equity shares.
The issue was overall subscribed a total of 63.56 times. The quota for qualified institutional bidders (QIBs) was booked a solid 90.09 times The quota for non-institutional investors was subscribed 42.21 times. The portions reserved for retail investors and employees saw bidding for 21.30 times and 4.27 times during the three-day bidding process.
Incorporated in 2004, Akums Drugs and Pharma is a pharmaceutical contract development and manufacturing organization (CDMO) which offers a comprehensive range of pharma products and services in India and overseas. It is engaged in the manufacture and sale of branded drugs and active pharmaceutical ingredients (APIs).
After receiving an overwhelming response to the issue, Akums Drugs and Pharmaceuticals shares will debut at the bourses on Tuesday as the shares may get listed at a premium of around 16 per cent over the issue price, said Prathamesh Masdekar, Research Analyst at StoxBox.
"We have a positive view of the company and advise the participants who have been allocated to the issue to hold the shares from a medium- to long-term perspective," he said.
Brokerage firms were mostly positive on the issue, suggesting investors to subscribe to it for a long term on the back of experience management, strong business model, growth potential, reasonable valuations and solid leadership in the domestic markets. However, they were skeptical of low margins, regulatory scrutiny and financials of the API business.
ICICI Securities, Citigroup Global Markets India, Axis Bank and Ambit were the book running lead managers of the Akums Drugs and Pharmaceuticals IPO, while Link Intime India served as the registrar for the issue. Shares of the company shall be listed on both BSE and NSE.