Godavari Biorefineries is recognized as one of the leading manufacturers of ethanol-based chemicals in India, holding the distinction of having the largest integrated bio-refinery in the country based on installed capacity. The company has emerged as a major player in the production of ethanol, establishing itself as one of India's largest producers by volume. In addition to its ethanol production, Godavari Biorefineries is notable for being the largest manufacturer of MPO worldwide in terms of installed capacity. Furthermore, it is one of only two manufacturers of natural 1,3 butylene glycol and the sole company in India to produce bio ethyl acetate.

The Godavari Biorefineries IPO, amounting to ₹554.75 crores, comprises a fresh issue of 92.32 lakh shares valued at ₹325.00 crores and an offer for sale of 65.26 lakh shares totaling ₹229.74 crores. The subscription period for this IPO opens on October 23, 2024, and closes on October 25, 2024. Investors can expect the allotment to be finalized on or around October 28, 2024, with the shares set to be listed on the BSE and NSE on a tentative date of October 30, 2024.

The share price band for the Godavari Biorefineries IPO is established between ₹334 and ₹352 per equity share, leading to a market capitalization of ₹1,801.39 crores at the upper end of the price band. The lot size for the IPO is 42 shares, requiring a minimum investment of ₹14,784 for retail investors. In contrast, High-Net-Worth Individuals (HNIs) must invest in a minimum of 14 lots (588 shares), amounting to ₹2,06,976.

SBI Capital Markets Limited and Equirus Capital Private Limited are acting as the book-running lead managers, while LINK INTIME INDIA PRIVATE LIMITED serves as the registrar for the issue.

As for the Grey Market Premium (GMP) of the Godavari Biorefineries IPO, it is projected at ₹0, reflecting the current financial performance of the company. It is essential to note that no significant trading occurs based on the GMP, limiting the real discovery of price before the listing on the stock exchange. The GMP is primarily influenced by the demand and supply of shares in an unregulated market, and it is provided solely for educational and informational purposes.

Live Subscription Status

On October 26, 2024, as of 03:00 PM, the live subscription status for the Godavari Biorefineries IPO indicates a subscription rate of 1.83 times on the final day of the subscription period. Investors are encouraged to monitor the live subscription status at the BSE for real-time updates.

Anchor Investors Report

Godavari Biorefineries has successfully raised ₹166.42 crores from anchor investors at a price of ₹352 per share. The company allocated 47,27,980 equity shares to these investors, reflecting strong interest in the IPO.

The allotment of equity shares to anchor investors comes from the Qualified Institutional Buyers (QIBs) reservation portion, indicating robust institutional support for the offering.

Allotment Status

The allotment date for the Godavari Biorefineries IPO is set for October 28, 2024. Investors can check their allotment status online by navigating to the IPO allotment status page, selecting Godavari Biorefineries Limited from the dropdown list, and entering their application number, PAN, or DP Client ID.

Objectives of Godavari Biorefineries Limited IPO

The proceeds from the fresh issue will be utilized for significant objectives, which include:

1. ₹2,400.00 million earmarked for the repayment or pre-payment of certain outstanding borrowings availed by the company.
2. Funds will also be directed towards general corporate purposes to bolster operational capabilities.

Financial Overview

Godavari Biorefineries' financial performance is noteworthy. The revenues from operations for the three-month period ended June 30, 2024, amounted to ₹5,252.73 million. For the fiscal years 2024, 2023, and 2022, the revenues were ₹17,010.64 million, ₹20,230.79 million, and ₹17,099.76 million, respectively. Despite these strong figures, the EBITDA for the three-month period ending June 30, 2024, was negative at ₹(94.90) million. The profit after tax during the same period was ₹(261.06) million, indicating a need for cautious investment.

For the Godavari Biorefineries IPO, the company is issuing shares at a pre-issue EPS of ₹2.93 and a post-issue EPS of ₹2.40. The pre-issue P/E ratio stands at 120.13x, while the post-issue P/E ratio is 146.66x, compared to the industry P/E ratio of 35.54x. The company's ROCE for FY24 is 9.53%, and RoE is 4.73%, providing a critical insight into the financial health of the company.

Given the Grey Market Premium (GMP) indicating potential listing gains of 0%, and considering the company’s financial metrics, we advise risk-averse investors to approach the Godavari Biorefineries Limited IPO with caution, especially for short-term gains or long-term investments.

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