Buy Akums Drugs and Pharmaceuticals; target of Rs 655: ICICI Securities

ICICI Securities is bullish on Akums Drugs and Pharmaceuticals has recommended buy rating on the stock with a target price of Rs 655 in its research report dated August 11, 2025.

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August 14, 2025 / 13:22 IST

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ICICI Securities's research report on Akums Drugs and Pharmaceuticals

Akums Drugs and Pharmaceuticals (Akums)’s Q1FY26 revenue was muted due to slowdown across verticals; however, better product mix aided gross margin expansion (+170bps YoY). CDMO business’ growth dampened (+4.0% YoY) due to lower API prices (-2.5% YoY). Losses in trade generics and API segments are narrowing led by efforts at rationalizing loss-making units. Management has revised its guidance to mid-single-digit growth for the CDMO segment with margins between 14–15%. API losses should shrink by ~INR 200mn in FY26. Supplies for 5-year European contract shall begin in Apr’27. Further, cash balance of INR 15.2bn may be deployed for M&A to improve scale. We cut our FY26E/FY27E EPS by ~17%/19% to bake in higher interest cost. Maintain BUY with a lower SoTP-based TP of INR 655.

Outlook

We expect Akums to post revenue/EBITDA/PAT CAGRs of 10.1%/ 18.3%/8.0% over FY25–27E with 172bps jump in EBITDA margin to 12.9% in FY27E. At CMP, the stock trades at 25.2x/19.6x FY26/FY27E EPS of INR 19/INR 24.5, respectively. We maintain BUY with a lower SoTP-based target price of INR 655 (INR 710 earlier).

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