Godavari Biorefineries IPO: Review, Valuation, Date & GMP

Godavari Biorefineries IPO-Complete Overview

Godavari Biorefineries IPO a Mainboard IPO is a book-built issue of Rs.554.75 crore (15,759,938 Shares) by Godavari Biorefineries Limited, established in 1956 is an Indian company that produces chemicals based on ethanol. The company had an integrated biorefinery producing 570 KLPD of ethanol as of June 30, 2024.

Based on installed capacity, the company is the world's largest manufacturer of MPO as of March 31, 2024. It is the sole producer of bioethyl acetate in India and one of just two producers of natural 1,3-butanediol.

Power, sugar, different grades of ethanol, and bio-based chemicals are among the products offered by the organization. Industries including food, drinks, medicines, flavours and scents, electricity, fuel, personal hygiene, and cosmetics employ these items.

The Department of Scientific and Industrial Research (DSIR) has three research and development facilities that are registered with the company one in Navi Mumbai, Maharashtra, and one each at the Sameerwadi and Sakarwadi Manufacturing Facilities. 

By October 2024, the business had registered 53 of these products/processes internationally and had been granted 18 patents.

Renowned clients of the company include Ankit Raj Organo Chemicals Limited, Escorts Chemical Industries, Khushbu Dye Chem Pvt Ltd, Shivam Industries, M/s Karnataka Chemical Industries, M/s Techno Waxchem Pvt Ltd, LANXESS India Private Limited, IFF Inc., Hershey India Pvt Ltd, Hindustan Coca-Cola Beverages Private Limited, and major oil marketing companies.

The business provides services to clients in more than 20 Countries such as Australia, China, Germany, etc. The business runs two manufacturing sites one in Ahmednagar, Maharashtra, and the other in Bagalkot, Karnataka.

This new IPO is to be launched on 23 October 2024, and the initial public offering of this upcoming IPO will end on 25 October 2024.

 

Detailed Video

Godavari Biorefineries IPO Details Today

Godavari Biorefineries IPO price band is Rs.334 to Rs.352 for each Share. The IPO date is from 23 October to October 25, 2024, and it will be listed at BSE and NSE. This IPO size is a total of 15,759,938 Shares (Rs.554.75 Cr) with a fresh issue of 9,232,955 (Rs.325 Cr) and an offer for sale (OFS) of 6,526,983 crore Shares (Rs.229.75 Cr).

Godavari Biorefineries Ltd listing Date

The IPO listing date is on Wednesday, October 30, 2024.

 

If You want to apply for the IPO, Click Here to Open a Demat Account.

Godavari Biorefineries: Product Portfolio

Bio-based Chemicals

Currently, ethanol-based chemicals such as ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, bio-acetic acid, butanol, EVE, and paraldehyde are included in the category of bio-based chemicals. Bio-based chemicals are used in a variety of industries, such as food, fuel, paint and coatings, personal care and cosmetics, flavour and fragrance, and pharmaceutical sectors.

Rectified spirits 

Rectified spirits are processed to produce fuel ethanol, pharma-grade ethanol, and extra-neutral alcohol, among other grades of ethanol. The produced ethanol is sold to oil marketing firms and is used in the chemical, beverage, and pharmaceutical sectors. 

The fermentation of sugar-based materials, starch, and cellulose-based feedstocks, such as corn, barley, wood, and wheat, among others, produces ethanol, a colourless, renewable molecule. Ethanol finds widespread use in the production of fuel and fuel additives, beverages, personal hygiene products, industrial solvents, and other products.

Sugar

The business is the production of sugar from sugarcane. A percentage of the sugar it manufactures is exported, and some sizable enterprises in the Indian food and beverage sector are among its domestic sugar customers. Apart from catering to institutional clients, it also offers packaged sugar under our exclusive brand, Jivana.

Co-generation

At the Sameerwadi Manufacturing Facility, bagasse is used as a feedstock to create electricity.  At the Sameerwadi Manufacturing Facility, the majority of its power needs are satisfied by the power generated. Additionally, it sells generated power to power distribution companies.

 

 

Company Financial

The company’s revenue fell by -15.92% and PAT decreased by -37.37% between FYs ended 31 March 2024 and 31 March 2023.

(Amount in Crore)

 

Revenue Bifurcation

Below is the revenue breakdown for various activities.

(Amount in million)

 

State-wise Revenue Bifurcation 

(Values in millions)

 

Geography-wise Revenue Bifurcation 

(Values in millions)

 

Industry-wise Revenue Bifurcation 

(Values in millions)

 

The Objective of the Issue

The company desires to use the Net Proceeds from the Issue to fulfill its following goals:

• Payback or prepayment, in whole or in part, of some loans taken out by the business.

• Financing the business's needs for working capital.

• Corporate Purposes.

Peers of Godavari Biorefineries Ltd.

Evaluation

Godavari's IPO price is between Rs.334 to Rs.352 for each Share.

Evaluation of P/E Ratio

Considering the period of FY 2024, with an EPS of Rs.2.93 from the last year, the resulting P/E ratio is 120.13x.

Considering the weighted EPS of Rs.3.78 for the last three years, the P/E ratio is 93.12x.

Comparative Analysis with Listed Peers

The average P/E Ratio of the industry is 35.54x.

In simple words, the P/E ratio of this IPO (120.13x), compared with the industry’s average P/E of 35.54x, has an overvaluation (on a P/E ratio basis only). Hence the price of the Share seems aggressively priced for the investors when considered based on the average P/E ratio of the industry.

 

IPO's Strengths 

• One of the producers of ethanol in terms of volume and one of the makers of ethanol-based compounds in India.

• Integrated biorefinery that, as of March 31, 2024, can produce ethanol with an installed capacity of 570 KLPD.

• A broad range of products and a solid rapport with a diverse group of prestigious clients from various industries and regions.

• Strong internal resources for research and development.

• Experienced promoter, board of directors, top management, and important professionals who are members of the Somaiya group.

IPO’s Weaknesses 

• The company's primary feed source is sugarcane, which is vulnerable to pest attacks, crop disease, and seasonal variations.

• The bulk of the raw materials used by the company come from a small number of suppliers. The business and operations will be significantly impacted if the raw materials are not obtained.

• A small number of goods account for a sizable portion of the company's revenue, so any decline in these will harm operations and finances.

• The business's capacity to grow will be negatively impacted if new items that have been developed over an extended time cannot be successfully brought to market.

 

Godavari Biorefineries IPO GMP Today

Godavari IPO GMP today is Rs.0 as of 19 October 2024. With a price of Rs.352 per Share, the estimated IPO listing price is Rs.352 when writing this information.

Godavari Biorefineries IPO Timetable (Tentative)

The IPO open date is from October 23 to October 25, 2024, with IPO allotment on October 28, 2024, refund initiation on October 29, 2024, and listing on October 30, 2024.

 

Godavari IPO Details

Godavari Biorefineries IPO Lot Details

The IPO allows retail investors to invest in a minimum and maximum of 1 Lot (42 Shares) amounting to Rs.14,784 and 13 Lots (546 Shares) amounting to Rs.1,92,192 respectively, while for HNI investors, the minimum Lot is 14 (588 Shares) amounting to Rs.2,06,976.

Godavari Biorefineries IPO Reservation

Promoters and Management of Godavari Biorefineries Ltd. 

• Samir Shantilal Somaiya.

• Lakshmiwadi Mines and Minerals Private Limited.

• Somaiya Agencies Private Limited.

Godavari Biorefineries IPO Lead Managers

• Equirus Capital Private Limited.

• SBI Capital Markets Limited.

Dividend Policy

The company has not paid any dividends in the last three fiscals.

Conclusion

The Godavari Biorefineries is an established player that commands a strong market in ethanol-based chemicals and renewable energy. For sure, its diversified product portfolio and huge production capabilities with diversified products are the company's strengths, but the IPO seems overpriced, considering the industry peers. An investor must analyze the risks through dependency on sugarcane and a few key products before placing his or her investment.

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

To Read the Prospectus of the Company Click Here to Download the DRHP.

DISCLAIMER: The content is purely for educational and information purposes only. We do NOT encourage/advise/suggest our active readers to be involved in any kind of buying or selling securities activities. Always consult your eligible financial advisor for investment-related decisions. The author does NOT through this blog intend to involve readers in trading.  

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