Godavari Biorefineries IPO Day 1: GMP, subscription status, key dates, more. Should you subscribe or not?

Godavari Biorefineries IPO: The initial public offering (IPO) of Godavari Biorefineries, a company specialising in ethanol and bio-based chemicals, opened for subscription on Wednesday, October 23. The three-day IPO will conclude on Friday, October 25.

On Tuesday, October 22, a day before the commencement of its public share sale, the company secured over ₹166 crore from anchor investors. Notable investors in the anchor book included HDFC Mutual Fund, Whiteoak Capital Fund, Goldman Sachs (Singapore) Pte Ltd, Societe General, and SBI General Insurance, as detailed in a circular on the BSE website.

Godavari Biorefineries IPO price band has been fixed in the range of ₹334 to ₹352 per equity share of the face value of ₹10. Godavari Biorefineries IPO lot size is 42 equity shares and in multiples of 42 equity shares thereafter.

Godavari Biorefineries IPO has reserved not more than 50% of the shares in the public issue for qualified institutional buyers (QIB), not less than 15% for non-institutional institutional investors (NII), and not less than 35% of the offer is reserved for retail investors.

Based in Maharashtra, Godavari Biorefineries is a leading producer of ethanol-based chemicals in India, with a diverse product portfolio encompassing bio-based chemicals, sugar, various grades of ethanol, and power.

Godavari Biorefineries IPO Subscription Status

The initial public offer of Godavari Biorefineries IPO has been subscribed 6% on the first day of subscription today, at 11:00 IST, as per BSE data.

The initial share sale received bid for 6,80,106 shares against 1,12,74,739 shares on offer, according to BSE.

The portion for retail investors received 11% subscription while the quota for non-institutional investors got subscribed 3%. The qualified institutional buyers (QIBs) part is yet to be booked.

Godavari Biorefineries IPO Review

Systematix Institutional Equities

According to the brokerage's analysis, the government's favourable ethanol regulations and the growing demand for bio-based chemicals are key factors in the company's growth. The brokerage believes that the government is committed to reaching 20% blending, which would help India's ethanol and sugar industries.

Strong long-term prospects for the business are presented by growing customer preference for safer chemicals and stricter laws imposed by governments across the world over the usage of dangerous chemicals. Future growth will be fueled by the company's persistent focus on creating cleaner chemistry through its robust internal R&D.

“At the upper end of the price band ( ₹334-352), the issue is valued at 15.7x FY24 EV/EBITDA compared with ~18.9x for Balrampur Chini, ~16.9x for Triveni Engineering and ~12.3x for Dalmia Bharat Sugars. We recommend ‘Subscribing to the issue,” the brokerage said.

Swastika Investmart Ltd

Although the company is the biggest producer of MPO worldwide and a major participant in ethanol-based specialty chemicals, the brokerage is neutral about the issue amid several challenges, including financial difficulties.

The brokerage noted that the IPO appears expensive and the company has a large debt load.

“While the company may benefit from the liberalised ethanol production norms, the current IPO valuation is not recommended. Investors who believe in the company's long-term prospects and are willing to accept the risks associated with the high debt and recent financial challenges may consider applying with caution,” the brokerage said.

Godavari Biorefineries IPO Details

The initial public offering includes a combination of new equity shares worth ₹325 crore and an offer for sale (OFS) of 65.27 lakh equity shares valued at ₹230 crore, at the upper end of the price range, by promoters and an investor. This results in a total IPO size of ₹555 crore.

Mandala Capital AG Ltd, a private equity firm, is selling 49.27 lakh shares through the OFS route.

The proceeds from the fresh issue amounting to ₹240 crore will be utilised for debt payment, and the remaining funds will be allocated for general corporate purposes.

The Godavari Biorefineries IPO's book-running lead managers are Equirus Capital Private Limited and SBI Capital Markets Limited, while the issue's registrar is Link Intime India Private Ltd.

Godavari Biorefineries IPO GMP today

Godavari Biorefineries IPO GMP today or grey market premium was ₹0, which meant shares were trading at their issue price of ₹352 with no premium or discount in the grey market according to investorgain.com

Experts at investorgain.com predict that the current IPO GMP trend will remain unchanged until the listing day, based on the grey market activity over the last seven sessions.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.