Buy Akums Drugs and Pharmaceuticals; target of Rs 565: ICICI Securities

ICICI Securities's research report on Akums Drugs and Pharmaceuticals

Akums Drugs and Pharmaceuticals (Akums)’s Q2FY26 performance was marred by pricing pressure in API and cost escalation on overheads of new plants. Volumes for the CDMO business, though, continue to grow (7% growth in Q2) despite flattish volumes for market. Ahead, exports are expected to pick up sharply with supplies to Zambia expected to begin in FY27 (revenue of USD 25mn); and from FY28, it would initiate supplies for the European contract. We trim FY27E/FY28E EPS by ~19%/12% to bake in slower growth in the CDMO segment and lower margins. The stock trades at P/BV of 2x/1.8x FY26E/FY27E,

Outlook

Which we believe is attractive considering its dominance in the Indian pharma manufacturing space. Retain BUY with a lower SoTP-based TP of INR 565.