ShubhShree Biofuels Energy Ltd, a leader in Biomass Supply Chain Management, has rapidly emerged as a key player in India’s renewable energy sector since its inception in 2021. The company specializes in sourcing and supplying biomass across multiple locations in India, promoting sustainability while leveraging cutting-edge technology in its operations. Now, ShubhShree Biofuels Energy is launching its Initial Public Offering (IPO), aiming to raise ₹16.56 crores through a Book Built Issue of 13.92 lakh shares.

The IPO subscription period began on September 09, 2024, and is open until September 11, 2024. The issue price is set within a price band of ₹113 to ₹119 per equity share, and HEM SECURITIES LIMITED serves as the book-running lead manager, with BIGSHARE SERVICES PRIVATE LIMITED as the registrar. The shares are set to be listed on the NSE SME, and Hem Finlease Private Limited will act as the market maker for this issue.

IPO Details

The minimum lot size for retail investors is 1,200 shares, requiring a minimum investment of ₹142,800. For High-Net-Worth Individuals (HNIs), the minimum required investment is 2 lots (2,400 shares), amounting to ₹285,600. The IPO allotment is expected to be finalized by Thursday, September 12, 2024, with shares likely to be listed on the NSE SME by Monday, September 16, 2024.

The funds raised through this IPO will be utilized for the following objectives:

₹212.52 lakhs for capital expenditure, primarily for the installation of additional plant and machinery.

₹900 lakhs for working capital requirements, essential for the company’s operational expansion.

Funds allocated to general corporate purposes, helping the company maintain flexibility and growth momentum.

Company Background and Promoters

ShubhShree Biofuels Energy was founded with the goal of becoming a sustainability champion in the biomass supply chain management space. The company has a broad geographical presence and is committed to reducing carbon footprints by prioritizing renewable energy sources, particularly biomass.

The company’s promoters include:

Anurag Agarwal: A driving force behind the company with over three years of experience in the biomass fuels sector.

Aastha Agarwal: Bringing expertise and innovation, she has also worked for three years in the industry.

Sagar Agrawal: With over ten years of experience in the biomass and renewable energy sector, Sagar Agrawal brings a wealth of knowledge and leadership.

Financial Performance

ShubhShree Biofuels Energy has displayed impressive financial growth in recent years. Revenue surged from ₹791.83 lakhs in FY22 to ₹5,971.24 lakhs in FY23, reaching ₹9,488.32 lakhs in FY24. The company’s EBITDA also witnessed substantial growth, rising from ₹34.21 lakhs in FY22 to ₹225.46 lakhs in FY23, and further climbing to ₹415.82 lakhs in FY24. Additionally, the PAT grew from ₹27.46 lakhs in FY22 to ₹242.38 lakhs in FY23, before increasing to ₹329.77 lakhs in FY24. These financial results reflect consistent growth and a strong financial position.

For the ShubhShree Biofuels IPO, the company is issuing shares at a pre-issue EPS of ₹8.60 and a post-issue EPS of ₹8.56. The pre-issue P/E ratio stands at 13.83x, while the post-issue P/E ratio is slightly higher at 13.90x. Additionally, the company boasts a Return on Capital Employed (ROCE) of 61.67% and a Return on Equity (ROE) of 68.15% for FY24. These metrics indicate that the IPO is fairly priced, providing investors with a balanced risk-reward ratio.

Subscription and Grey Market Premium

As of 05:57 PM on September 09, 2024, the live subscription status for ShubhShree Biofuels Energy Limited IPO shows a subscription rate of 2.47 times on the first day of the subscription period. This strong response suggests investor confidence in the company’s potential for growth.

In the Grey Market, ShubhShree Biofuels Energy IPO is currently witnessing a Grey Market Premium (GMP) in the range of ₹90 to ₹100 per share. This indicates potential listing gains of 80% to 84%, which has sparked significant interest among retail and HNI investors. It is important to note that while Grey Market Premium offers insights into market sentiment, it is based on informal trading and should not be relied upon as an official metric.

How to Check Allotment Status

Once the allotment process is completed, investors can check their ShubhShree Biofuels Energy IPO allotment status by following these steps:

Visit the IPO allotment status page on the registrar’s website or the NSE platform.

Select ShubhShree Biofuels Energy Limited IPO from the list of IPOs.

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

Submit the details to view the allotment status.

By checking the allotment status, investors can determine if they have been allotted shares and proceed with their investment plans accordingly.

IPO Review and Recommendation

ShubhShree Biofuels Energy Limited has emerged as a strong player in the biomass supply chain sector, and its financial performance reflects consistent growth over the past few years. The company’s ability to scale its operations while maintaining strong profitability metrics makes this IPO an attractive option for investors. With a pre-issue P/E ratio of 13.83x, the IPO is fairly valued compared to other companies in the renewable energy sector.

The Grey Market Premium indicates potential listing gains of up to 84%, making this IPO an appealing option for those looking for short-term gains. However, the company’s long-term growth prospects, supported by its investments in technology and expansion of operational capacity, make it a solid candidate for long-term investment as well.

Given the company’s strong financials, market leadership in a growing sector, and sustainable business practices, we recommend that investors apply for the ShubhShree Biofuels Energy IPO for both listing gains and long-term value appreciation.

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