Godavari Biorefineries Limited is a leading manufacturer of ethanol-based chemicals in India, boasting the largest integrated bio-refinery in the country based on installed capacity. The company is recognized as one of India’s largest producers of ethanol by volume and holds a global leadership position in MPO production. Additionally, Godavari is one of only two manufacturers of natural 1,3 butylene glycol and the sole producer of bio ethyl acetate in India.

In this context, Godavari Biorefineries is launching a Book Built Issue to raise ₹554.75 Crores, which includes a fresh issue of 92.32 lakh shares worth ₹325.00 Crores and an Offer for Sale of 65.26 lakh shares totaling ₹229.74 Crores. The IPO is set to open for subscription on October 23, 2024, and will close on October 25, 2024. The allotment is projected to be finalized on October 28, 2024, with shares expected to list on the BSE and NSE by October 30, 2024.

The share price band for this IPO is established at ₹334 to ₹352 per equity share, giving Godavari Biorefineries a market capitalization of approximately ₹1,801.39 Crores at the upper price band. The lot size for the IPO is 42 shares, requiring a minimum investment of ₹14,784 for retail investors. For High-Net-Worth Individuals (HNIs), the minimum investment is 14 lots, amounting to ₹2,06,976.

Financial Performance Overview

The Grey Market Premium (GMP) for Godavari Biorefineries IPO is currently anticipated to be ₹0, indicating that no significant trading is occurring based on this metric. It is important to note that the GMP is influenced by demand and supply dynamics in an unregulated market, and its current value does not provide a reliable assessment of potential listing gains.

As of 10:19 AM on October 24, 2024, the live subscription status shows that the IPO is subscribed 0.34 times on its second day. Additionally, Godavari Biorefineries has successfully raised ₹166.42 Crores from anchor investors at the upper price of ₹352 per share, allocating 47,27,980 equity shares to these investors.

Financial Metrics and Investment Insights

Godavari Biorefineries reported revenues of ₹5,252.73 million for the three-month period ended June 30, 2024, with revenues for the fiscal years 2024, 2023, and 2022 at ₹17,010.64 million, ₹20,230.79 million, and ₹17,099.76 million, respectively. The Profit After Tax (PAT) for the same three-month period stands at (₹261.06 million), while the previous fiscal years reported ₹122.99 million, ₹196.37 million, and ₹190.97 million.

The company’s Earnings Per Share (EPS) is reported at ₹2.93 pre-issue and ₹2.40 post-issue. The Price-to-Earnings (P/E) ratio is quite high at 120.13x pre-issue and 146.66x post-issue, compared to the industry average of 35.54x. The Return on Capital Employed (ROCE) is 9.53%, and Return on Equity (ROE) is 4.73%, indicating the company is fairly priced relative to its performance metrics.

Investment Recommendation

Considering the financial performance and valuation metrics, we recommend risk-averse investors to avoid the Godavari Biorefineries Limited IPO for both listing gains and long-term investments. The grey market's lack of premium suggests caution for potential investors.

Conclusion and Resources

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