Down 40% since IPO, is Akums Drugs finally a bargain?

Akums Drugs & Pharmaceuticals began operations in 2004 inside a single rented shed on the outskirts of Haridwar, cranking out cough syrups for household names that did not want the hassle of running their own plants. Two decades later, Akums is a behemoth. It is India’s largest finished-dose contract developer and manufacturer (CDMO) by volume with 10 factories, nearly 5,000 crore formulation units across tablets, capsules, syrups and a client roster that includes most Indian and many multinational brands. However, that hasn’t helped the stock, which is down 40 per cent since listing in August last year. Why? In terms of profitability, Akums is still a lightweight. Its FY25 EBITDA margin of 11 per cent pales in front of the 24-35 per cent peers like Divi's Laboratories, Syngene International and Gland Pharma routinely post. That stubborn gap has kept investors puzzled. The stock still trades at 27 times FY25 earnings—much cheaper than Syngene’s 55x and Divi’s 80x. Valuation debates ultimately converge on two questions: why are Akums’ margins so low and, more importantly, can they move high enough to justify a sustained re-rating? Why margins are low Akums has built its business on plain-vanilla formulations—paracetamol, vitamin blends, routine antibiotics—manufactured under cost-plus contracts for nearly every big‐name Indian brand. The model is a textbook volume play: clients pay