ShubhShree Biofuels Energy Ltd, a prominent player in biomass supply chain management since 2021, has emerged as a leader in promoting sustainability and cutting-edge technology in India. The company’s commitment to the biomass energy sector aligns with global efforts to promote green energy, making it a significant contributor to India’s renewable energy portfolio.

The company launched its Initial Public Offering (IPO) on September 9, 2024, with a subscription period closing on September 11, 2024. The book-built issue amounted to ₹16.56 crores, consisting of a fresh issue of 13.92 lakh shares. ShubhShree Biofuels Energy's IPO comes at an issue price between ₹113 to ₹119 per equity share, and investors can bid for a minimum lot size of 1,200 shares, amounting to ₹142,800 for retail investors. For High-Net-Worth Individuals (HNIs), the minimum investment is set at ₹285,600 for 2 lots.

HEM Securities Limited serves as the book-running lead manager, while Bigshare Services Private Limited is the registrar for this issue. Hem Finlease Private Limited is the sole market maker, responsible for liquidity once the shares are listed on the NSE SME platform on September 16, 2024.

Subscription and Allotment Details

The ShubhShree Biofuels Energy IPO witnessed overwhelming demand, particularly among HNIs and retail investors. The issue was oversubscribed 119.37 times, indicating robust interest in the company's business model and growth potential. The IPO allotment will be finalized on September 12, 2024, and investors can check their allotment status using the following steps:

Visit the registrar’s website.

Select ShubhShree Biofuels Energy Ltd IPO from the dropdown.

Enter the application number, PAN, or DP Client ID.

Submit the details to view the allotment status.

This high subscription reflects strong market confidence in biomass energy, a crucial component of India's transition to renewable energy.

Financial Performance Overview

ShubhShree Biofuels Energy Ltd has demonstrated remarkable financial growth over the last few years, driven by its expansion across multiple locations in India and increasing adoption of biomass as an alternative energy source. The company’s revenue jumped from ₹791.83 lakhs in FY22 to ₹5,971.24 lakhs in FY23, reaching ₹9,488.32 lakhs in FY24, showcasing exponential growth.

Similarly, EBITDA increased from ₹34.21 lakhs in FY22 to ₹415.82 lakhs in FY24, indicating improved operational efficiency. Profit After Tax (PAT) also showed significant growth, rising from ₹27.46 lakhs in FY22 to ₹329.77 lakhs in FY24, reflecting robust profitability.

In terms of valuation, the pre-issue EPS stands at ₹8.60, with a post-issue EPS of ₹8.56. The P/E ratio of 13.83x (pre-issue) and 13.90x (post-issue) is relatively moderate, compared to the sector average, suggesting that the IPO is fairly priced given the company’s financials.

Return on Capital Employed (ROCE) for FY24 stands at 61.67%, while Return on Equity (ROE) is a high 68.15%, which speaks to the company’s ability to generate returns from its equity base and capital employed.

Grey Market Premium (GMP) Insights

The Grey Market Premium (GMP) for ShubhShree Biofuels Energy Ltd is currently in the range of ₹50 to ₹60, indicating potential listing gains of 40% to 50%. While the GMP can offer insights into market sentiment and potential demand, it is important to note that the Grey Market operates informally and is not a guaranteed reflection of actual stock performance upon listing.

Objectives of the ShubhShree Biofuels Energy IPO

The company has outlined several key objectives for the utilization of the IPO proceeds, which will further enhance its capabilities in the renewable energy sector:

₹212.52 lakhs will be used for funding capital expenditure, specifically for the installation of additional plant and machinery to increase production capacity.

₹900.00 lakhs will be allocated to meet working capital requirements as the company expands its biomass supply chain operations.

A portion of the funds will also be utilized for general corporate purposes.

These objectives align with ShubhShree Biofuels Energy’s long-term strategy to scale its operations and strengthen its position as a leader in the biomass energy sector in India.

Leadership and Promoters

The company is led by Anurag Agarwal, Aastha Agarwal, and Sagar Agarwal, the promoters of ShubhShree Biofuels Energy Ltd. Sagar Agarwal has over 10 years of experience in the biomass energy sector, while Anurag Agarwal and Aastha Agarwal bring 3 years of industry experience. Together, they have built a company that prioritizes sustainability and utilizes cutting-edge technology to address India’s growing energy needs through biomass.

Review and Recommendations

ShubhShree Biofuels Energy Ltd operates in a rapidly growing sector, with biomass energy gaining momentum as a sustainable and eco-friendly alternative to traditional fossil fuels. The company has positioned itself as a leader in biomass supply chain management, capitalizing on the increasing focus on renewable energy in India.

The company’s financial performance reflects its potential for long-term growth, driven by increasing demand for biomass energy and its expanding operations. With a P/E ratio that is on par with the industry average and strong returns on capital and equity, the IPO appears fairly priced.

Additionally, the GMP suggests a potential for substantial listing gains, making it an attractive proposition for investors seeking short-term profits. However, long-term investors may also find value in the company’s growth potential and its positioning in a sector that is set to benefit from India’s renewable energy push.

Given the high subscription rate, strong GMP, and robust financials, we recommend investors apply to the ShubhShree Biofuels Energy IPO for both listing gains and long-term investment opportunities.

Conclusion

The ShubhShree Biofuels Energy Ltd IPO represents an excellent opportunity for investors to participate in India’s renewable energy revolution, specifically in the rapidly growing biomass energy sector. With impressive financial growth, an experienced leadership team, and a focus on sustainability, the company is well-positioned for future expansion.

Investors can check their allotment status via the registrar’s website and track further updates on the company’s performance post-listing.

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