Akums Drugs shares hit 2nd upper circuit, soar to new high

Akums Drugs and Pharmaceuticals continues to dominate headlines, locking in its second consecutive 5% upper circuit on Thursday. The stock surged to a new high of ₹609.95 a share on the BSE, marking a significant recovery from its 52-week low of ₹527. This rally has gained momentum following the company's announcement of an exclusive sales agreement with Caregen, a renowned South Korean leader in the nutraceuticals sector.

Strategic partnership driving growth

Akums' recent deal with Caregen allows it exclusive rights to sell Caregen's products in India. The agreement also includes responsibilities for packaging, marketing, and distribution under Caregen's trademark, Akums' brand, or even Akums' clients' branding. This partnership positions Akums to leverage Caregen's innovative peptide technology, potentially expanding its market share in the fast-growing nutraceuticals industry.

The collaboration comes as a strategic move to capitalise on India's increasing demand for nutraceutical products. With this partnership, investors looking to invest in stocks tied to the health and wellness segment may find Akums' growth story compelling.

Mixed Q2 financial performance

Despite the recent stock rally, Akums faced a challenging Q2FY25. Revenue declined by 12.5% year-on-year (Y-o-Y) to ₹1,033 crore, and EBITDA margins contracted by 290 basis points to 12.9%. The company's CDMO segment, which generates 77% of its revenue, also saw a drop in EBITDA to ₹122.7 crore. However, PAT rose 9% Y-o-Y to ₹66.7 crore, reflecting strong cost management.

The management acknowledged the quarter's hurdles, including sluggish demand and high R&D income in Q2FY24. Despite these challenges, sequential growth across revenue, EBITDA, and PAT demonstrates resilience, making Akums an intriguing option for those planning to invest in stocks with a long-term perspective.

Key takeaways

• Stock performance: Akums Drugs hit ₹609.95 after consecutive 5% gains, reflecting market confidence post-Caregen deal.
• Strategic partnership: The agreement with Caregen opens doors for Akums in India's growing nutraceuticals market.

Financial snapshot: Despite Q2FY25 challenges, sequential growth signals recovery, appealing to those looking to invest in stocks for potential gains.