Buy Akums Drugs & Pharmaceuticals, target price Rs 710: ICICI Securities

ICICI Securities has a buy call on Akums Drugs & Pharmaceuticals with a target price of Rs 710. The current market price of Akums Drugs & Pharmaceuticals is Rs 508.1.

Investment Rationale
Akums Drugs and Pharmaceuticals is aiming for profitable growth ahead. ICICI Securities recently hosted Akums' management for a roadshow. Akums has been able to maintain its CDMO and overall EBITDA margin at 15.5%/ 12.0% despite its sub-par revenue growth in 9MFY25. Further efforts towards curbing losses in API division and new export order (starting CY27) could drive operating leverage and boost margins in coming years. The impact of low API prices is behind, and if prices remain steady in the next couple of quarters, then volume growth could bounce back. Additionally, in FY26, better traction from hormones and new injectable plant may improve overall product mix of CDMO biz and drive value growth and margins. Losses in API biz are likely to curtail further and the biz could break even by the end of FY27. While trimming exposure in trade generics may impact growth, its sub-par margins could ensure no major dent in EBITDA. The brokerage has retained a BUY call with a target price of Rs 710.

Promoter/FII Holdings
Promoters held 75.26 per cent stake in the company as of 31-Dec-2024, while FIIs owned 6.36 per cent, DIIs 6.71 per cent.