Godavari Biorefineries IPO: Godavari Biorefineries has fixed the price band for its upcoming initial public offering (IPO), which is slated to open for subscription on October 23, in the range of ₹334 to ₹352 apiece.
Godavari Biorefineries IPO will close for subscription on October 25. The anchor investment date is fixed as October 22. The allotment of shares will likely take place on October 28 with listing likely on October 30.
The initial share sale is a mix of fresh issue worth ₹325 crore and an offer-for-sale (OFS) component of ₹229.75 crore. Overall, the company is looking to raise ₹554.75 crore.
Under the OFS, Mandala Capital will be selling its entire stake of 49,26,983 equity shares. It had acquired the stock at an average price of ₹188.91 per share. Other selling shareholders include promoters Somaiya Agencies Private Limited, Samir Shantilal Somaiya, Lakshmiwadi Mines and Minerals Private Limited, Filmedia Communication Systems Private Limited and Somaiya Properties and Investments Private Limited.
The proceeds raised from the fresh share sale will be utilised for repayment or pre-payment, in full or in part, of certain borrowings availed by the company, and for general corporate purposes.
In the IPO, 50 per cent of the issue is reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors and 15 per cent for non-institutional investors (NIIs).
Here are key things investors must know about Godavari Biorefineries IPO from the RHP before subscribing to the IPO:
The company is a manufacturer of ethanol-based chemicals in India, with an integrated bio-refinery at an installed capacity of 570 KLPD. As per its RHP, the company is one of the largest producers of ethanol in terms of volume as of March 31, 2024.
The company has a wide and diversified product portfolio, comprising bio-based chemicals, sugar, different grades of ethanol and power. These products are used in a range of industries such as food, beverages, pharmaceuticals, flavours & fragrances, power, fuel, personal care and cosmetics.
Samir Shantilal Somaiya, Lakshmiwadi Mines and Minerals, Sakarwadi Trading Company and Somaiya Agencies Private are the promoters of the company. They cumulatively hold 27,112,386 shares in total, representing a 64.64% stake in the company.
As per the RHP, Alkyl Amines Chemicals is a peer of Godavari Biorefineries. It has a price-to-earnings (P/E) ratio of 78.84. Jubilant Ingrevia (P/E of 64.10), Laxmi Organic Industries (P/E of 65.11), EID Parry (P/E of 16.69), Triveni Engineering (P/E of 26.06), Balrampur Chini Mills (P/E of 24.72), Dalmia Bharat Sugar (P/E of 15.83), Dhampur Sugar Mills (P/E of 11.20) and Dwarikesh Sugar Industries (P/E of 17.30) are some of the other listed peers of the company.
Godavari Biorefineries' profit stood at ₹12.30 crore as of March 31, 2024, lower from ₹19.64 crore in the year-ago period. Meanwhile, its revenue declined also declined to ₹1,701.06 crore from ₹2,023.08 year-on-year.
The company caters to some marquee players like Hershey India, Hindustan Coca-Cola Beverages, Karnataka Chemical Industries, Techno Waxchem, and Escorts Chemical Industries, along with major oil marketing companies.
The company has two manufacturing facilities. One is located in the Bagalkot district in Karnataka - Sameerwadi Manufacturing Facility - and the other one is in the Ahmednagar district in Maharashtra - Sakarwadi Manufacturing Facility.
The Sameerwadi Manufacturing Facility is an integrated facility dedicated to the manufacturing of ethanol, sugar, and power. As of June 30, 2024, this facility had a sugarcane crushing capacity of 18,000 TCD, an installed capacity of 600 KLPD for rectified spirits, and power plants with an aggregate installed capacity of 45.56 MW.
The Sakarwadi Manufacturing Facility is currently dedicated to the manufacturing of bio-based chemicals. The aggregate installed capacity at this facility for bio-based chemicals, including ethyl acetate, acetaldehyde, acetic acid, 3-methyl-3-pentene (MPO), 1,3 BG, crotonaldehyde, and paraldehyde, among others, was 117,826.20 MTPA as of June 30, 2024.
Apart from India, the company has an international presence with customers spread across the world including Australia, China, Germany, France, Italy Japan, Kenya, Netherlands, Singapore, United Kingdom, United Arab Emirates, Indonesia and the United States of America (USA).
The company offers a range of products, primarily consisting of bio-based chemicals, ethanol, sugar, and power. The bio-based chemicals include ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, bio-acetic acid, butanol, EVE, and paraldehyde.
Apart from this, the company sells sugar and certain other food products under the ‘Jivana’ brand.
Some of the key risks that the company faces include:
It has a high dependency on a few suppliers for the supply of raw materials, excluding sugarcane. The top three suppliers contribute 77 per cent of the total percentage of cost of raw materials purchased as of June 30, 2024.
The company also faces concentration risk in terms of its customers, with the top 10 customers contributing to 46.77 per cent of the overall revenue.
As of June 30, 2024, the company had total borrowings of ₹748.87 crore on a consolidated basis which includes non-fund-based borrowings and accrued interest on borrowings.
