The Rajputana Biodiesel IPO is set to open on November 26, 2024, and close on November 28, 2024, offering a fresh issue of 19 lakh shares totaling ₹24.70 Crores. The price band is set between ₹123 to ₹130 per share, and at the upper price of ₹130, the market capitalization of Rajputana Biodiesel will be ₹91.44 Crores. The IPO will be conducted through the book-building process, with shares expected to be listed on the NSE SME on December 3, 2024.

The lot size for the IPO is 1,000 shares, with retail investors required to invest a minimum of ₹1,30,000. For High-Net-Worth Individuals (HNIs), the minimum investment is 2 lots (2,000 shares), totaling ₹2,60,000. GYR Capital Advisors Private Limited is the book-running lead manager, while Maashitla Securities Private Limited is the registrar. Giriraj Stock Broking serves as the market maker.

Rajputana Biodiesel: Company Overview

Rajputana Biodiesel Limited (RBL) specializes in manufacturing and supplying biofuels, primarily biodiesel, along with by-products like glycerine and fatty acids. The company operates from a 4,000 sq. m. facility in Phulera, Rajasthan, with an approved production capacity of 30 KLPD (kilo liters per day) and an installed capacity of 24 KLPD. Rajputana’s state-of-the-art production setup is capable of accommodating multiple feedstocks, offering flexibility in meeting diverse market demands. The company is actively exploring opportunities for export expansion in the growing renewable energy sector.

Financial Performance and Metrics

Rajputana Biodiesel has demonstrated steady growth in recent years. For the quarter ended July 31, 2024, the company reported revenue of ₹2,779.18 Lakhs, up from ₹2,354.06 Lakhs in Fiscal 2023 and ₹1,746.07 Lakhs in Fiscal 2022. The EBITDA for the same period was ₹421.91 Lakhs, showing strong operational efficiency. Profit after Tax (PAT) for FY24 stood at ₹259.59 Lakhs, compared to ₹168.83 Lakhs in FY23, indicating improving profitability.

The company’s pre-issue EPS is ₹9.16, with a post-issue EPS of ₹6.43. The pre-issue P/E ratio is 14.19x, and the post-issue P/E ratio is 20.21x, compared to the industry average of 31x. The Return on Capital Employed (ROCE) for FY24 is 22.19%, and the Return on Net Worth (RoNW) is 34.43%, suggesting that the IPO is fairly priced relative to the market.

Grey Market Premium and IPO Valuation

The Grey Market Premium (GMP) for the Rajputana Biodiesel IPO is currently ₹30 (23%), indicating potential listing gains of around 23% after the IPO. However, it is important to note that GMP is based on demand and supply in the unorganized market and cannot be considered a reliable indicator for future price movements.

Despite the GMP, investors should exercise caution, as no real trading happens based on GMP before the listing. The valuation appears attractive with a P/E ratio lower than the industry average, making it an interesting choice for risk-tolerant investors.

IPO Proceeds Utilization

The Fresh Issue proceeds will be utilized for the following purposes:

1. ₹420 Lakhs will be allocated for a loan to subsidiary Nirvaanraj Energy Pvt. Ltd. (NEPL) to support the expansion of its existing unit.
2. ₹1,220 Lakhs will be used for working capital requirements to fuel growth and operational needs.
3. The remaining funds will be directed towards general corporate purposes and issue expenses.
   
   

   The Upcoming IPOs in this week and coming weeks are Ganesh Infraworld, Suraksha Diagnostic, Property Share REIT, Rosmerta Digital, Avanse Financial and Nisus Finance.

   The Current active IPO is Agarwal Toughened, Apex Ecotech, Abha Power and Steel and Rajputana Biodiesel.

Rajputana Biodiesel IPO Review and Investment Advice

Based on the company’s financial performance and fair valuation, the Rajputana Biodiesel IPO presents a moderate investment opportunity. The company operates in the biofuels sector, which holds significant potential due to the growing emphasis on renewable energy and sustainable solutions.

The Grey Market Premium indicates potential for short-term gains, but investors should approach this IPO with caution, particularly if they are looking for long-term stability in the biodiesel market. Given the company’s pre-issue P/E of 14.19x, and the relatively lower industry P/E, the IPO is fairly priced, suggesting a reasonable entry point for risk-seeking investors.

In conclusion, Rajputana Biodiesel IPO could be a worthwhile consideration for those seeking listing gains, but long-term investors may need to carefully assess the company’s growth prospects in the competitive biodiesel sector.

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