Godavari Biorefineries Limited has launched its much-anticipated Initial Public Offering (IPO), which is open for subscription from October 23, 2024, to October 25, 2024. The company is looking to raise ₹554.75 crore through a combination of a fresh issue of shares and an offer for sale (OFS). As one of the leading manufacturers of ethanol-based chemicals in India, this IPO is being closely followed by both retail and institutional investors.
The total issue size of the Godavari Biorefineries IPO is ₹554.75 crore. This consists of a fresh issue of 0.92 crore shares, aggregating to ₹325.00 crore, and an OFS of 0.65 crore shares, aggregating to ₹229.75 crore. The price band for the IPO is set between ₹334 to ₹352 per share, and the minimum lot size for bidding is 42 shares.
Here’s a breakdown of key IPO information:
The allotment is expected to be finalized on October 28, 2024, and the shares are likely to be listed on both BSE and NSE on October 30, 2024
Retail investors can apply for a minimum of 1 lot (42 shares), amounting to ₹14,784 at the upper price band of ₹352. The maximum lot size for retail investors is 13 lots (546 shares), with an investment of ₹192,192. Meanwhile, high-net-worth individuals (HNIs) can apply for a minimum of 14 lots (588 shares), amounting to ₹206,976, while larger investors (bNII) can bid for 68 lots (2,856 shares), with a total investment of ₹1,005,312.
Godavari Biorefineries Limited was incorporated in 1956 and has since grown into one of India’s leading manufacturers of ethanol-based specialty chemicals. The company operates two manufacturing facilities, located in Bagalkot, Karnataka, and Ahmednagar, Maharashtra. With an integrated biorefinery setup, Godavari Biorefineries has an ethanol production capacity of 570 KLPD (kiloliters per day), making it a significant player in the bio-based chemical industry.
One of the company’s key strengths is its leadership in the production of MPO (Methylpentanediol), where it holds the title of the world's largest manufacturer. It is also one of only two manufacturers globally of natural 1,3-butanediol and the only Indian company producing bio ethyl acetate.
Godavari Biorefineries serves several industries, including food and beverages, pharmaceuticals, flavors and fragrances, cosmetics, and personal care. Its clientele includes marquee names like Hindustan Coca-Cola Beverages, Hershey India, and LANXESS India. With customers in over 20 countries, the company has a diverse international presence, serving regions such as Australia, Germany, the UK, the UAE, and the United States.
Despite its solid market position, Godavari Biorefineries faced a challenging period in the past few years. The company’s revenue declined by 15.92% between the fiscal years 2023 and 2024, while its profit after tax (PAT) dropped by 37.37%. The ban on ethanol production during FY23 and natural calamities in FY24 impacted the company's performance.
Here’s a snapshot of the company’s financials:
While these numbers indicate a slowdown, the company is optimistic about future growth, especially with the recent liberalization of ethanol production norms in India.
The funds raised from the fresh issue portion of the IPO will be primarily used for:
The promoters of Godavari Biorefineries Limited include Samir Shantilal Somaiya, Lakshmiwadi Mines and Minerals Private Limited, and Somaiya Agencies Private Limited. Post-IPO, the promoter’s stake in the company is expected to reduce from 81.06% to 63.31%.
On October 22, 2024, Godavari Biorefineries raised ₹166.42 crore from anchor investors by allotting 4,727,980 shares. Some of the notable names in the anchor investor category include prominent domestic and international institutional investors.
As of October 23, 2024, the IPO has been subscribed 0.14 times overall, with the retail portion receiving 0.25 times subscription. The Qualified Institutional Buyers (QIB) and Non-Institutional Investors (NII) categories are expected to pick up momentum in the subsequent days of the IPO.
Godavari Biorefineries Limited is a well-established player in the bio-based chemicals industry with a strong market position and a diversified product portfolio. While the company’s financial performance has been under pressure due to external challenges, the future outlook appears promising with the liberalized ethanol norms and expected recovery in demand across its key markets.
Investors looking for long-term growth opportunities in the bio-chemical sector may find this IPO attractive, especially given the company’s leadership position in the ethanol and bio-based chemical industries. However, with its current financial challenges, risk-averse investors may want to exercise caution.
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