Godavari Biorefineries Limited experienced a lackluster debut on the stock exchanges on October 30, 2024, with its shares opening at ₹308 on the NSE, representing a 12.5% decline from its IPO price of ₹352 per share. On the BSE, the stock began trading at ₹310.55, reflecting an 11.78% decrease compared to the issue price.
IPO Overview
The IPO for Godavari Biorefineries, valued at ₹554.75 crore, was open for subscription from October 23 to October 25, 2024, with a price band set between ₹334 and ₹352 per share. The offering generated considerable interest, receiving 1.76 times the number of bids for the shares available. The subscription details were as follows:
- Retail Investors: Subscribed 1.76 times
- Qualified Institutional Buyers (QIBs): Subscribed 2.76 times
- Non-Institutional Investors (NIIs): Subscribed 0.93 times
The IPO structure included a fresh issue of 0.92 crore shares, raising ₹325 crore, alongside an offer for sale (OFS) of 0.65 crore shares valued at ₹229.75 crore. Prior to the IPO, the company raised ₹166.42 crore from anchor investors on October 22, 2024.
Investment Details and Fund Utilization
Retail investors could subscribe with a minimum lot size of 42 shares, requiring a minimum investment of ₹14,784. The funds raised through the IPO are earmarked for several purposes, including repaying or pre-paying a portion of outstanding debts to ease the company’s financial burden and supporting general corporate activities.
Company Background
Established in 1956, Godavari Biorefineries has positioned itself as a leading producer of ethanol-derived chemicals, operating one of India’s largest integrated biorefineries. The company boasts a substantial ethanol production capacity of 570 KLPD. By March 31, 2024, Godavari Biorefineries had emerged as the world’s largest producer of MPO by installed capacity and is among the only two global manufacturers of natural 1,3-butanediol. It also holds the distinction of being the sole producer of bio ethyl acetate in India.
Financial Performance and Outlook
Despite its strong market standing, Godavari Biorefineries has encountered financial challenges. Between the fiscal years ending March 31, 2023, and March 31, 2024, the company’s revenue decreased by 15.92%, and its profit after tax (PAT) dropped by 37.37%. These financial setbacks may have influenced investor sentiment during the IPO, contributing to the disappointing listing performance.
The underwhelming debut of Godavari Biorefineries’ shares highlights potential broader market uncertainties and investors’ focus on the company’s near-term earnings potential, particularly affected by the recent decline in revenue and profitability.
Disclaimer: This report is for informational purposes only and should not be considered financial advice. Investing in stocks involves risks, and past performance is not indicative of future results. Please conduct your own research or consult a financial advisor before making investment decisions.
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