Godavari Biorefineries Limited is set to launch its initial public offering (IPO) on October 23, with a price range between Rs 334 and Rs 352 per equity share. As a prominent player in ethanol-based chemical manufacturing, the IPO is expected to attract significant interest from both institutional and retail investors. The subscription period will close on October 25, with the anchor investment window opening on October 22.
IPO Details
The Godavari Biorefineries IPO comprises a combination of fresh equity shares and an offer-for-sale (OFS). The company aims to raise a total of Rs 554.75 crore, which includes a fresh issue of Rs 325 crore and an OFS of Rs 229.75 crore. The OFS will primarily be executed by Mandala Capital, which plans to divest its entire stake of 49.26 lakh equity shares, acquired at an average price of Rs 188.91 per share. Other shareholders participating in the OFS include various promoters and entities, such as Somaiya Agencies Private Limited and Lakshmiwadi Mines and Minerals Private Limited.
The funds raised from the fresh issue will primarily be utilized to repay or pre-pay existing borrowings, with any leftover capital directed toward general corporate purposes.
Key Dates
- IPO Subscription Opens: October 23
- IPO Subscription Closes: October 25
- Anchor Investment Period: Starts October 22
- Allotment of Shares: Expected on October 28
- Stock Market Listing: Anticipated on October 30
Company Overview
Godavari Biorefineries is one of India’s largest ethanol producers, operating an integrated biorefinery with an installed capacity of 570 KLPD. The company’s portfolio includes bio-based chemicals, ethanol, sugar, and power, serving diverse industries such as food and beverages, pharmaceuticals, and cosmetics. For the fiscal year ending March 31, 2024, the company reported revenues of Rs 1,701.06 crore and a profit of Rs 12.30 crore, both of which showed a decline compared to the previous year. The proceeds from the IPO are intended to enhance operational efficiencies and expand production capacity.
The company has established strong relationships with well-known customers, including Hershey India and Hindustan Coca-Cola Beverages, and supplies ethanol to major oil marketing companies.
Manufacturing Facilities
Godavari Biorefineries operates two key manufacturing plants: the Sameerwadi facility in Bagalkot, Karnataka, which focuses on ethanol, sugar, and power, and the Sakarwadi facility in Ahmednagar, Maharashtra, which specializes in bio-based chemicals.
Market Position and Financial Comparisons
In terms of market competition, Godavari Biorefineries faces rivals like Alkyl Amines Chemicals, Jubilant Ingrevia, and Balrampur Chini Mills, with varying price-to-earnings (P/E) ratios: Alkyl Amines Chemicals at 78.84, Jubilant Ingrevia at 64.10, and Laxmi Organic Industries at 65.11. Other peers in the sugar and bio-based chemicals sector include EID Parry (P/E of 16.69) and Triveni Engineering (P/E of 26.06).
Risks and Challenges
Despite its robust business model, Godavari Biorefineries faces certain risks, including a heavy reliance on a small number of key suppliers for raw materials (excluding sugarcane), which contribute to 77% of its total raw material costs. Additionally, the company’s revenue is concentrated among its top 10 customers, accounting for nearly 47% of its total income.
Debt Management
As of June 30, 2024, the company had total borrowings of Rs 748.87 crore. A significant portion of the IPO proceeds is earmarked for debt repayment, reflecting the company’s commitment to reducing financial liabilities and improving its balance sheet.
Disclaimer:
This document is for informational purposes only and should not be considered as investment advice. The information provided regarding the Godavari Biorefineries Limited IPO is based on publicly available data and sources believed to be reliable. However, the accuracy and completeness of this information cannot be guaranteed. Potential investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions. Investing in stocks and IPOs involves risks, including the loss of principal. Past performance is not indicative of future results.
Leave a Reply