Onyx Biotec To Open Its IPO for Subscription on November 13

Onyx Biotec Ltd., a Punjab-based manufacturer of sterile pharmaceutical products, is set to open its initial public offering (IPO) for subscription on November 13, 2024. The IPO, priced in the range of Rs.58-Rs.61 per share, aims to raise Rs.29.34 crore at the upper price band. The issue will close on November 18, 2024.

Onyx Biotec IPO 

Onyx Biotec IPO comprises a fresh issue of 48.10 lakh equity shares, with no offer-for-sale component. The proceeds, net of issue expenses, will go entirely to the company. The shares will be listed on the NSE SME Emerge platform, and trading is expected to commence on November 22, 2024. Retail investors can apply for a minimum of 2,000 shares, translating to Rs.1.22 lakh at the upper price band.

Utilization of Funds

Onyx Biotec plans to allocate Rs.6.08 crore to upgrade its existing manufacturing unit to produce large-volume parenteral for intravenous use. An additional Rs.1.24 crore will fund a high-speed cartooning packaging line for dry powder injections. The company will also repay debt amounting to Rs.12 crore, with the remaining proceeds set aside for general corporate purposes.

Financials

The company’s revenue has fluctuated over recent years. It reported total income of Rs.44.98 crore in FY22, Rs.39.62 crore in FY23, and Rs.53.87 crore in FY24, with net profits of Rs.3.35 crore, Rs.1.85 crore, and Rs.3.03 crore respectively. For the two months ending May 31, 2024, Onyx recorded a net profit of Rs.1.31 crore on revenues of Rs.10.54 crore.

Operating in a highly competitive and fragmented market, Onyx Biotec faces challenges due to fluctuating profitability and high debt levels. At the upper price band, the issue is priced at a P/E ratio of 36.53 based on FY24 earnings, raising concerns about valuation.

Conclusion: While Onyx Biotec demonstrates good industry relationships and modern manufacturing capacity, its inconsistent financial performance and high leverage may deter some investors. Well-informed individuals might consider the Onyx Biotec IPO for a moderate, long-term investment based on their risk appetite, which is very important to take into consideration.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.