Onyx Biotec, a pharmaceutical company specializing in sterile water for injections and contract manufacturing, experienced a weak market debut on November 22, 2024. Its shares listed on the NSE SME platform at ₹54, reflecting an 11.5% discount to its issue price of ₹61 per share. Despite the lackluster start, the stock gained 5% post-listing, closing at ₹56.75.

IPO Details and Market Response

The Onyx Biotec IPO, valued at ₹29.34 crore, was open for subscription from November 13 to November 18, 2024, with a price band of ₹58 to ₹61 per share. The issue garnered significant interest, being oversubscribed 198 times, with notable participation across investor categories:

• Non-institutional investors: Oversubscribed 602 times
• Retail investors: Oversubscribed 118 times
• Qualified institutional buyers (QIBs): Oversubscribed 32.49 times

This robust response highlighted investor confidence in the company’s growth potential, even as its market debut reflected broader SME segment volatility.

Planned Utilization of IPO Funds

The proceeds from the IPO are earmarked for strategic initiatives to enhance production and operational efficiency. Key allocations include:

• Upgrading Manufacturing Unit I to produce large-volume parenteral (LVP) for intravenous use.
• Establishing a high-speed carton packaging line at Manufacturing Unit II for dry powder injections.
• Repayment or prepayment of loans, reducing financial liabilities.
• General corporate purposes, aimed at strengthening the company’s market position.

Company Overview and Manufacturing Capabilities

Established as a key player in the pharmaceutical manufacturing industry, Onyx Biotec has made a mark with its production of sterile water for injections and a diverse range of dry powder injections and dry syrups. The company serves both domestic and international markets, leveraging its state-of-the-art manufacturing facilities located in Himachal Pradesh:

1. Unit I: Produces 6,38,889 units of sterile water for injections per day.
2. Unit II: Manufactures 40,000 units of dry powder injections and 26,667 units of dry syrups per day in a single shift.

Key Clients and Industry Standing

The company boasts an impressive client roster, including Hetero Healthcare Limited, Mankind Pharma Limited, Sun Pharmaceutical Industries Limited, and Reliance Life Sciences Limited. These partnerships underscore Onyx Biotec's credibility and established presence in the pharmaceutical manufacturing domain.

Challenges and Opportunities

Despite a weak listing performance, Onyx Biotec’s long-term prospects remain promising, supported by:

• Strong oversubscription levels, indicating robust investor interest.
• Planned infrastructure upgrades, which could enhance production capacity and product offerings.
• A focus on high-demand pharmaceutical products, such as sterile water for injections and intravenous solutions.

However, challenges persist, including:

• Market volatility, particularly in the SME segment.
• Dependency on a limited number of high-profile clients.
• Competitive pressures in the pharmaceutical manufacturing industry.

Conclusion

Onyx Biotec’s market debut reflects a mix of investor optimism and broader market caution. While the listing at an 11.5% discount may have disappointed initial investors, the 5% recovery post-listing demonstrates confidence in the company’s long-term growth strategy.

With its focus on upgrading facilities, diversifying product offerings, and maintaining robust client relationships, Onyx Biotec is poised for sustained growth in the highly competitive pharmaceutical sector. Investors should consider the company's strong fundamentals and future expansion plans before making investment decisions.