| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 334 to ₹ 352 | 42 | 23rd Oct, 2024 – 25th Oct, 2024 | ₹ 554.75 Cr |
About Godavari Biorefineries Ltd IPO
Godavari Biorefineries is one of the prominent manufacturers of ethanol-based chemicals in India. As of March 31, 2024, the company has the largest integrated bio-refinery in the country in terms of installed capacity. It is one of India’s largest producers of ethanol by volume as of March 31, 2024 (source: Frost & Sullivan Report). The company is also the largest manufacturer of MPO worldwide in terms of installed capacity, one of only two manufacturers of natural 1,3 butylene glycol, and the only company in India to manufacture bio ethyl acetate. Additionally, it has established India’s first bio-based EVE manufacturing facility as of March 31, 2024. The company’s diversified product portfolio includes bio-based chemicals, sugar, various grades of ethanol, and power. These products are utilized in a range of industries such as food, beverages, pharmaceuticals, flavors & fragrances, power, fuel, personal care, and cosmetics. According to the Frost & Sullivan Report, the company has the widest portfolio of bio-based products in India. Utilizing sugarcane as a feedstock, the company manufactures a wide range of products, including sugar, ethanol, bio-based chemicals, and power. It was among the first companies in India to use sugarcane juice and syrup for ethanol production (source: Frost & Sullivan Report). The company continuously strives to improve the valorization of sugarcane through the development of downstream products and increasing the diversion of sugarcane towards value-added products. For instance, it has successfully manufactured a wide range of bio-based chemicals such as ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, bio-acetic acid, butanol, EVE, and paraldehyde. The company is also exploring the utilization of grains to manufacture grain-based ethanol.
Objective of the Godavari Biorefineries Ltd IPO
The net proceeds from the fresh issue will be used towards the following purposes:
- Repayment/Prepayment of certain outstanding borrowings;
- General corporate purposes.
Rationale To Invest In Godavari Biorefineries Ltd IPO
Diversified product portfolio along with wide geographical reach to drive growth
Godavari Biorefineries has expanded and diversified its manufacturing capabilities and product portfolio, primarily bio-based chemicals, sugar, and ethanol. This diversification has reduced the company’s dependence on any specific product category. The company’s bio-based chemicals find applications in various industries, including personal care and cosmetics, flavour and fragrance, food, fuel, paints and coatings, and pharmaceuticals. The ethanol produced is sold to oil marketing companies and used in the beverages, pharma, and chemical industries. Additionally, the company sells sugar and other food products under its retail brand Jivana, offering a diverse array of products for the Indian kitchen, from refined sugar to brown sugar, salt, turmeric, jaggery, and sugarcane juice concentrate. The ‘Jivana’ products are sold across retail stores and online channels. The company has increased its focus on sales and distribution by expanding its social media presence and participating in exhibitions, store activities, and promotions. Further, the company has an international presence with customers spread across the world, including Australia, China, Germany, France, Italy, Japan, Kenya, Netherlands, Singapore, United Kingdom, United Arab Emirates, Indonesia and the USA. The company has offices in Hoofddorp (Netherlands) and Philadelphia (USA), which enables it to assess international demand and increase customer outreach, thereby bolstering product development initiatives. We, thus, believe that a diversified product portfolio, together with long-standing relationships with a diversified customer base across industries and geographies, helps to broad base growth and de-risk business across customers, sectors and geographies.
A leading ethanol-based chemicals manufacturer, benefits from economies of scale and industry tailwinds enhance growth prospects
The company is a prominent manufacturer of ethanol-based chemicals in India and has the largest integrated bio-refinery in the country in terms of installed capacity. The company was also the largest manufacturer of MPO worldwide in terms of installed capacity, one of only two manufacturers of natural 1,3 butylene glycol, and the only company in India to manufacture bio ethyl acetate. Additionally, it has set up India’s first bio-based EVE manufacturing facility. Leveraging its experience in ethanol-based chemicals, the company manufactures a wide range of bio-based chemicals, including ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, bio-acetic acid, butanol, EVE, and paraldehyde. The company believes its bio-based chemicals help customers substitute conventional materials without losing functionality. Further, the European regulation concerning the ‘Registration, Evaluation, Authorization and Restriction of Chemicals’ (REACH) has, in 2015, banned products, including glues containing toluene, chloroform, or benzene. This ban might be adopted by other regions as well, which will enhance the need to move to a green solvent like bio ethyl acetate and bio-butyl acetate which will benefit the company to deliver long-term growth going ahead.
Valuation of Godavari Biorefineries Ltd IPO
Godavari Biorefineries manufactures ethanol-based chemicals and operates an integrated biorefinery for ethanol production in India. The company’s product portfolio includes bio-based chemicals, sugar, various grades of ethanol, and power. These products are used in food, beverages, pharmaceuticals, flavours and fragrances, power, fuel, personal care, and cosmetics. Godavari’s long-standing relations with customers, especially in sugar and bio-based chemicals segments, help the company understand customer requirements and enable the cross-selling of new products to such customers. The company constantly evaluates opportunities to diversify its product portfolio by adding new products (including downstream and value-added products) that are synergistic with the existing products. The company believes it is well-poised and technologically equipped to add additional products to the value chain. According to the F&S Report, the Indian ethanol market is projected to grow from USD 7.0 bn in 2023 to USD 17.5 bn by 2028, exhibiting a CAGR of 20.0% during 2023-2028 on the back of increasing ethanol use in applications such as fuel additives, disinfectants, and beverages. On the financial front, the company intends to reduce its borrowings and debt-to-equity ratio. The improvement in the debt-to-equity ratio is intended to enable the company to raise further resources to fund potential business development opportunities. As we advance, Godavari Biorefineries’ financial performance is likely to be driven by diversifying product offerings and improving operational efficiency, long-term relationships with marquee customers, and research and development of new products to meet customers’ requirements. The issue is valued at a P/E of 120.1x on the upper price band based on FY24 earnings. Though the issue looks rich in terms of valuation, we believe that the company’s strong business performance along with industry tailwinds provide an opportunity from a medium to long term perspective. Therefore, we recommend a SUBSCRIBE rating for the issue.
What is the Godavari Biorefineries Ltd IPO?
Godavari Biorefineries IPO is a book built issue of Rs 554.75 crores. The issue is a combination of fresh issue of 0.92 crore shares aggregating to Rs 325.00 crores and offer for sale of 0.65 crore shares aggregating to Rs 229.75 crores. Login to your account now.
How to apply for the Godavari Biorefineries Ltd IPO through StoxBox?
To apply for the Godavari Biorefineries Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Godavari Biorefineries Ltd IPO open?
Godavari Biorefineries Ltd IPO is opening on 23rd October 2024. Apply Now
What is the lot size of the Godavari Biorefineries Ltd IPO?
The Lot Size of Godavari Biorefineries Ltd IPO is 42 equity shares. Login to your account now
When is the Godavari Biorefineries Ltd IPO allotment date?
The allotment Date for Godavari Biorefineries Ltd IPO is 28th October 2024. Login to your account now.
When is the Godavari Biorefineries Ltd IPO listing date?
The listing Date for Godavari Biorefineries Ltd IPO is 30th October 2024. Login to your account now
What is the minimum investment required for the Godavari Biorefineries Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,784. Login to your account now
What is the maximum investment allowed for theGodavari Biorefineries Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 192,192. Login to your account now
What are the risks associated with investing in the Godavari Biorefineries Ltd IPO?
- The company depends on a few suppliers to supply a significant portion of raw materials (excluding sugarcane). Any failure to procure such raw materials from these suppliers may hurt manufacturing operations and results of operations.
- The company derives a portion of revenue from a few customers, and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for products may adversely affect the business, results of operations, and financial condition.
- The company is dependent on third-party manufacturers for the manufacture and sale of products under the retail brand Jivana. Any disruption in such third-party manufacturers’ ability to supply these products or their failure to meet the quality standards or delivery timelines could adversely affect the business, financial condition, and results of operations.
When will the Godavari Biorefineries Ltd IPO shares be credited to my Demat account?
The Godavari Biorefineries Ltd IPO be credited to the account on allotment date which is 29th October 2024. Login to your account now
Where can I find the Godavari Biorefineries Ltd IPO prospectus?
The prospectus ofGodavari Biorefineries Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Godavari Biorefineries Ltd IPO?
| IPO Open Date | Wednesday, October 23, 2024 |
| IPO Close Date | Friday, October 25, 2024 |
| Basis of Allotment | Monday, October 28, 2024 |
| Initiation of Refunds | Tuesday, October 29, 2024 |
| Credit of Shares to Demat | Tuesday, October 29, 2024 |
| Listing Date | Wednesday, October 30, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on October 25, 2024 |
