ICICI Securities has updated its target price for Akums Drugs and Pharmaceuticals to Rs 925 following a strong Q2 FY27 performance. The company's CDMO segment led growth with a 38.6% revenue jump. Investors are now tracking the company's upcoming international expansion in Zambia and Europe, alongside efforts to improve API segment margins.
ICICI Securities has raised its target price for Akums Drugs and Pharmaceuticals to Rs 925, citing optimism following the company's financial results for the second quarter of the 2027 fiscal year. The brokerage firm maintains a positive outlook on the stock, supported by a significant expansion in the company's core Contract Development and Manufacturing Organization (CDMO) business.
Akums Drugs reported a consolidated revenue of Rs 1,342 crore for the second quarter, marking a 31.9% increase compared to the same period in the previous year. The company's profitability also saw a notable boost, with profit after tax rising 168% year-on-year to Rs 115 crore. The CDMO segment, which accounts for roughly 83% of the company's total revenue, was the primary growth engine, recording a 38.6% increase in revenue. Operating margins also improved, reaching 14.5% as the company benefited from volume growth and better product pricing.
Looking ahead, the company is focusing on international expansion to drive future revenue. Operations in Zambia are slated to begin in the first quarter of fiscal year 2028, with an estimated sales potential of USD 25 million. Additionally, the company is preparing for supply shipments to Europe, scheduled to commence in the final quarter of fiscal year 2028, which carries a potential annual revenue of Euro 35 million. Domestically, the company is working to improve the performance of its API business, with management aiming to achieve a break-even status within the next three to four quarters.
While the expansion plans are significant, investors should consider specific business risks. The company is exposed to volatility in raw material costs, which can exert pressure on profit margins. There is also an inherent execution risk involved in successfully scaling operations in new international markets like Zambia and Europe. Furthermore, the company’s financial success will depend on its ability to convert its current deal pipeline into actual billing and on achieving the targeted break-even point in its API division. Watching the company's progress on these international projects and the margin trend in the coming quarters will be important for investors.