The Rajputana Biodiesel IPO, which is offering 19 lakh shares through a Fresh Issue, opens on November 26, 2024 and closes on November 28, 2024. The price band is set between ₹123 to ₹130 per share, giving the company an estimated market capitalization of ₹91.44 Crores at the upper end of the price band.

Rajputana Biodiesel IPO Subscription and Allotment Details

The lot size for the IPO is 1,000 shares, meaning retail investors will need to invest a minimum of ₹1,30,000. For High-Net-Worth Individuals (HNIs), the minimum investment is for 2 lots (2,000 shares), which will amount to ₹2,60,000. As of November 27, 2024, the IPO has been subscribed 31.49 times, indicating strong demand.

The Grey Market Premium (GMP) for this IPO is ₹30, or 23%, based on market performance and the company’s financials. While the GMP suggests potential listing gains, it is important to note that Grey Market Premium figures are unregulated and should not be solely relied upon for investment decisions.

Company Overview and Financial Performance

Rajputana Biodiesel Limited (RBL) specializes in producing biofuels, including biodiesel, glycerine, and fatty acids. Its 4,000 sq. m. facility in Phulera, Rajasthan operates with an approved production capacity of 30 KLPD and an installed capacity of 24 KLPD. The company is expanding its reach by exploring export opportunities to diversify its market presence.

The company has experienced steady growth in revenue, with revenue for FY24 at ₹5,367.51 lakhs, compared to ₹2,354.06 lakhs in FY23. Their EBITDA for FY24 stands at ₹766.91 lakhs, reflecting a healthy operating profit margin. The Profit After Tax (PAT) for FY24 was ₹452.43 lakhs, significantly higher than ₹168.83 lakhs in FY23.

For the Rajputana Biodiesel IPO, the pre-issue EPS is ₹9.16, and the post-issue EPS is expected to be ₹6.43, leading to a pre-issue P/E ratio of 14.19x and post-issue P/E ratio of 20.21x. The industry P/E ratio stands at 31x, indicating that the IPO is fairly priced when compared to its peers.

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

The Current active IPO is Apex Ecotech, Abha Power and Steel, Rajputana Biodiesel, and Rajesh Power Services.

Valuation and Market Outlook

The Return on Capital Employed (ROCE) for FY24 is 22.19%, and the Return on Net Worth (RoNW) is 34.43%, suggesting that the company is generating good returns on its capital. Despite its strong financial performance, the post-issue P/E ratio of 20.21x indicates a moderate valuation in the context of the overall market.

Given the 23% GMP and strong subscription figures, the Rajputana Biodiesel IPO could offer potential listing gains. However, investors should be cautious due to the relatively high post-issue P/E ratio, which may limit long-term upside.

Rajputana Biodiesel IPO Objectives

The funds raised from the Fresh Issue will be used for:

1. ₹420 Lakhs for loan to subsidiary Nirvaanraj Energy Pvt. Ltd. for expanding its existing unit.
2. ₹1,220 Lakhs for working capital requirements.
3. The remaining funds will be allocated for general corporate purposes and issue expenses.

Rajputana Biodiesel IPO Review and Investment Advice

While Rajputana Biodiesel operates in a growing sector, its moderate valuation and high post-issue P/E ratio suggest that it may not be an ideal pick for long-term investors. The 23% GMP indicates that there is potential for listing gains, making it suitable for risk-tolerant investors seeking short-term returns. However, for those looking for more secure, long-term growth, this IPO may be best avoided.

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