Onyx Biotec Ltd., established in 2009, is a pharmaceutical company involved in the manufacture and distribution of generic and proprietary pharmaceutical products. It produces a range of products including Water for Injection (WFI), Dry Powder Injections, and Dry Powder Syrups, catering to both the domestic and international markets. Onyx Biotec has garnered a strong presence in the Indian pharmaceutical sector, offering critical injectable medicines and other healthcare solutions.

The company is now launching an Initial Public Offering (IPO), aiming to raise ₹29.34 Crores through the issue of 48.1 lakh shares. The subscription period for the Onyx Biotec IPO opens on November 13, 2024, and closes on November 18, 2024. The price band is set at ₹58 to ₹61 per share, with a lot size of 2,000 shares. Retail investors will need to invest a minimum of ₹1,22,000, while High-Net-Worth Individuals (HNIs) must invest a minimum of ₹2,44,000 for 2 lots. The market capitalization of the company, at the upper price band of ₹61 per share, will be ₹110.60 Crores. The shares are expected to list on the NSE SME on November 21, 2024.

Financial Overview and IPO Utilization

For FY24, Onyx Biotec reported revenues of ₹5,387.43 Lakhs, with an EBITDA of ₹840.77 Lakhs and a Profit after Tax (PAT) of ₹303.16 Lakhs. This reflects stable growth, although profits are modest compared to revenues. The company’s pre-issue EPS stands at ₹2.54, and the post-issue EPS is estimated at ₹1.67, giving a pre-issue P/E ratio of 24.01x and a post-issue P/E ratio of 36.52x, compared to the industry P/E of 75.10x.

The funds raised through the IPO will be used for several purposes:

1. ₹607.70 Lakhs for the upgradation of the existing manufacturing unit to increase production capacity for intravenous use.
2. ₹124.05 Lakhs for setting up a high-speed packaging line at the company’s manufacturing unit.
3. ₹1,200.00 Lakhs to prepay loans, reducing financial liabilities.
4. The remaining proceeds will be used for general corporate purposes.

IPO Subscription and Market Performance

As of November 14, 2024, the Onyx Biotec IPO has been subscribed 9.11 times, indicating strong demand from investors. Despite this, the Grey Market Premium (GMP) is ₹0, signaling no expected listing gains. While the high demand in subscription indicates investor confidence, the GMP suggests caution, as no immediate gains are anticipated post-listing.

Investment Recommendation

The IPO is priced with a pre-issue P/E ratio of 24.01x and a post-issue P/E ratio of 36.52x, which are relatively modest compared to the industry average. The company’s financial performance, although showing growth, indicates moderate profitability with a low return on equity (RoE) and return on capital employed (RoCE). These factors suggest that while Onyx Biotec is a stable company, it may not offer substantial short-term growth or returns.

Considering the lack of listing gains and the modest growth prospects, we recommend avoiding the Onyx Biotec IPO for both short-term listing gains and long-term investment. Investors may want to look for other pharmaceutical or SME sector stocks with stronger growth potential and better market positioning.

For more information on upcoming IPOs and stock market updates, stay tuned to our Top IPOs 2024 List and Stock Market News & Updates.

**Join our Trading with CA Abhay Telegram Channel for insights and Finance Saathi Telegram Channel for the latest IPO updates.

Start your Stock Market Journey by Opening a Free Demat Account with Choice Broking.