Akums Drugs and Pharmaceuticals (ADPL), established in 2004, is a leading contract manufacturer for domestic and multinational pharmaceutical companies. The company operates 12 formulation facilities in Uttarakhand and Himachal Pradesh and three API units in Punjab and Haryana. With 4,000+ formulations across 60+ dosage forms, ADPL is a key player in the CDMO segment.
Stock Price Movement:
With a market capitalization of Rs 8,229.97 crore on Thursday, the shares of Akums Drugs & Pharmaceuticals Ltd were currently trading at Rs 516 per equity share, trading below 0.2 percent from its previous day’s close price of Rs 517.20.
Target:
Citi has maintained a buy rating on Akums Drugs & Pharmaceuticals and given a target price of Rs 700 per equity share, which has an upside potential of 36 percent from the current price of Rs 516.
Rationale for Target:
The brokerage firm stated that the company received a 200-euro million CDMO contract from a global pharma company and had already received 100-euro million.
The brokerage also stated that Akums is India’s largest domestic-focused CDMO and the second-largest overall, with a competitive edge in scale, manufacturing capabilities, and international expansion potential. The company faces transient weakness due to API price corrections of 10-15 percent YoY, lower CDMO revenue 4% YoY, and subdued product development revenues. However, Citi expects CDMO growth to recover in H1FY26E, helping valuations bounce back.
Further, the brokerage noted that the company is expanding capacity with new facilities in Hardwar and Baddi and has a six-year vision to transition into a global player. Akums is trading at 12x FY27E EBITDA, a 30 percent discount to the second-largest CDMO player, with Citi valuing it at 15x CDMO EBITDA and 10x non-CDMO EBITDA.
Financials:
The company recorded revenues of Rs 1,010 crores in Q3 FY25, marking a decline from Rs 1,083 crore in the same period last year. Net profit saw a significant drop to Rs 66 crores from Rs 195 crores in Q3 FY24. Despite the fall in earnings, the operating margin improved to 12 percent from 9 percent. The return on equity (ROE) stood at 9.8 percent, while the return on capital employed (ROCE) was at 7.5 percent.
Written by Shashi Kumar
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