Godavari Biorefineries Limited IPO: Issue dates, price, and lot size

The Godavari Biorefineries Limited IPO is poised to attract significant attention from investors. It opens for subscription on October 23, 2024, and closes on October 25, 2024. This public offering has garnered significant interest due to the company's unique positioning in the bio-based chemicals market. The IPO is set to raise approximately ₹554.75 crores, with the funds being used to repay outstanding borrowings and for general corporate purposes.

Godavari Biorefineries Limited IPO Synopsis

Godavari Biorefineries Limited is offering a combination of fresh shares and an offer for sale. The total issue size comprises 1.58 crore shares, aggregating to ₹554.75 crores. Out of this, a fresh issue of ₹325 crores will be raised through the sale of 0.92 crore shares, while the remaining ₹229.75 crores will be raised through the offer for the sale of 0.65 crore shares. The Godavari Biorefineries Limited IPO price band is set between ₹334 and ₹352 per share, with a minimum lot size of 42 shares.

Godavari Biorefineries Limited IPO Details

The Godavari Biorefineries Limited IPO is one of the most anticipated upcoming IPOs. Below is the table summarizing the IPO details:

Godavari Biorefineries Limited IPO timeline

Below is the tentative schedule for the IPO:

About Godavari Biorefineries Limited

Incorporated in 1956, Godavari Biorefineries Limited is one of India's leading manufacturers of ethanol-based chemicals. The company operates an integrated biorefinery, which is the largest in the world in terms of capacity for producing Multi-Product Output (MPO). Godavari Biorefineries is the only Indian company to manufacture bio-ethyl acetate and natural 1,3-butanediol, demonstrating its technological edge in the market.

The company has two manufacturing facilities in Karnataka and Maharashtra. It serves clients in various sectors, such as food and beverages, pharmaceuticals, personal care, and industrial chemicals. It has a well-established customer base in over 20 countries, making it a significant player in the global biochemicals market.

Financials of Godavari Biorefineries Limited

Godavari Biorefineries has faced some financial setbacks over the past few years due to changes in government policies and natural calamities. The revenue for the year ending March 31, 2024, decreased by 15.92%, while the profit after tax dropped by 37.37% compared to the previous year. However, with the liberalisation of ethanol production norms, the company is poised for a turnaround, backed by improved industry conditions and a focus on high-value bio-based products.

Strengths of Godavari Biorefineries Limited IPO 

The Godavari Biorefineries Limited IPO review emphasises several strengths that make this IPO appealing to investors:

1. Largest global producer: As the largest manufacturer of MPO worldwide, the company has a strong market position.
2. Unique product portfolio: It is one of the few companies globally and the only one in India to produce bio-ethyl acetate and natural 1,3-butanediol.
3. Integrated operations: With multiple manufacturing facilities and R&D centres, the company is well-positioned for continued growth.
4. Expanding client base: The company serves a wide range of industries, catering to prominent players such as Hershey India, Hindustan Coca-Cola, and others.
5. Renewable and sustainable focus: The emphasis on bio-based chemicals aligns with the growing global shift towards sustainability.

Challenges of Godavari Biorefineries Limited IPO

Despite its strengths, the Godavari Biorefineries Limited IPO presents certain challenges for potential investors:

• Recent financial setbacks: The company's financials have suffered recently due to government policy changes regarding ethanol production and adverse natural events.
• High debt levels: With a debt-to-equity ratio of 3.01, the company faces significant leverage risk, which could impact future profitability.
• Competitive market: Operating in the bio-based chemicals sector means facing intense competition from both domestic and international players.

Should you invest in the Godavari Biorefineries Limited IPO?

The decision to invest in the Godavari Biorefineries Limited IPO depends on your risk appetite and investment goals. The IPO may appeal to long-term investors who are willing to take a calculated risk on the company's future growth potential. The liberalisation of ethanol production policies and a shift towards renewable chemicals present significant growth opportunities.

However, it is important to consider the recent financial performance and the company's high debt levels. As part of your IPO investment strategy, it may be wise to evaluate the company's growth plans and the potential impact of industry-specific risks. Reviewing the Godavari Biorefineries Limited IPO GMP (grey market premium) closer to the listing date can also offer insights into market sentiment.

FAQs

1. What are the financials of Godavari Biorefineries Limited?

The company has experienced fluctuating revenues and profits over the past three years, with notable revenue growth in FY2024 but also facing challenges with profitability.

2. What are the strengths of Godavari Biorefineries Limited?

The company is one of the largest integrated sugar and ethanol manufacturers in India, benefiting from government support for ethanol blending programs and a diversified product portfolio.

3. What are the potential risks of investing in this IPO?

The company faces risks such as fluctuating raw material prices, regulatory changes, and the impact of weather on sugarcane production, which could affect its performance.

4. Will existing shareholders be selling shares in this IPO?

Yes, the IPO includes an offer for sale portion, where existing shareholders will sell shares worth ₹229.75 crores.