Onyx Biotec Lists at 11.39% Discount, Recovers to Trade 5% Higher on NSE SME

Onyx Biotec Limited, established in May 2005 and specialising in pharmaceutical manufacturing of sterile water for injections and dry powder products, showed weak indications in the pre-open session on Friday, 22nd November 2024, ahead of its listing on the NSE SME platform. The company operates two manufacturing units in Solan, Himachal Pradesh, serving major clients, including Hetero Healthcare, Mankind Pharma, and Sun Pharmaceutical.

Listing Details

• Pre-open Time & Price: As of 09:39:00 AM IST, during the special pre-open session, the indicative equilibrium price was discovered at ₹54.05, marking a weak start to its journey as a publicly traded company.
• Listing Time & Price: At the market opening, Onyx Biotec shares were listed at ₹54.05, showing a significant discount to the issue price on NSE SME.
• Comparison to Issue Price: The listing price represented an initial markdown from the IPO issue price. Onyx Biotec had set its IPO price band from ₹58 to ₹61 per share, with the final issue price being fixed at the upper end of ₹61.
• Percentage Change: After listing at 11.39% discount, by 10:02:16 AM IST, the stock recovered to trade at ₹56.75, up 5% from its listing price but still below the issue price.

First-Day Trading Performance

• Price Movement: Opened at ₹54.05, hit a high of ₹56.75 and a low of ₹51.45 in early trading.
• Market Capitalisation: As of 10:02:16 AM IST, the company's market capitalisation stood at ₹102.90 crore.
• Trading Volume: The traded volume was 5.92 lakh shares with a traded value of ₹3.21 crore in early trading.

Market Sentiment and Analysis

• Market Reaction: Strong selling pressure evident in pre-open session.
• Subscription Rate: The IPO was heavily oversubscribed by 198 times (as of November 18, 2024, 6:20:00 PM), with NIIs leading at 602.86 times subscription, followed by retail investors at 118.26 times, and QIBs at 32.49 times.
• Grey Market Premium: The GMP declined from ₹15 to ₹10 ahead of listing.

Growth Drivers and Challenges

Expected drivers of future performance:

• Large manufacturing capacity
• Strong client relationships
• Quality certifications
• Diverse product portfolio
• Contract manufacturing capabilities

Potential challenges:

• Inconsistent top-line performance
• Fluctuating bottom lines
• High competition in pharma sector
• Working capital requirements
• Regulatory compliance risks

Utilisation of IPO Proceeds

Onyx Biotec plans to use the funds for:

• Upgrading Unit I for large volume of parents
• Setting up high-speed cartooning line at Unit II
• Repayment of loans
• General corporate purposes

Financial Performance

The company has shown mixed results:

• Revenue increased by 35.99% to ₹53.87 crore in FY2024 from ₹39.62 crore in FY2023
• Profit After Tax rose by 64.35% to ₹3.03 crore in FY2024 from ₹1.84 crore in FY2023
• For two months ended May 2024, reported revenue of ₹10.54 crore with PAT of ₹1.31 crore

As Onyx Biotec prepares for its market debut, the weak pre-open session indicates cautious market sentiment despite the company's recent growth in financials. The significant discount to issue price suggests investors may be concerned about the sustainability of its growth trajectory in the competitive pharmaceutical manufacturing sector.