We 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. Retain BUY.
OutlookWe expect Akums to post revenue/EBITDA/PAT CAGR of 14.9%/ 22.3%/32% over FY25–27E with 160bps jump in EBITDA margin to 13.6% in FY27E. At CMP, the stock trades at 22.1x/16.4x FY26E/27E EPS of INR 23.1/INR 31.2, respectively. We retain BUY with an unchanged target price of INR 710, valuing the company at 23x FY27E earnings.
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