The Godavari Biorefineries IPO is set to make its debut in the primary market on October 23, 2024, with significant expectations surrounding its launch. Aiming to raise ₹554.75 crore, this IPO consists of a fresh issue and an offer for sale (OFS), marking a crucial step for the company in its growth trajectory. Here are the essential details you need to know before considering this investment opportunity.
Overview of Godavari Biorefineries
Godavari Biorefineries is one of India’s leading producers of ethanol-based chemicals, boasting a bio-refinery capacity of 570 KLPD. The company has established itself as a major player in the ethanol market, producing a diverse range of products that cater to various industries, including food and beverages, pharmaceuticals, and personal care.
Key Details of the IPO
- IPO Size: The company plans to raise ₹554.75 crore by selling approximately 15,759,938 shares. This includes a fresh issue of ₹325 crore and an OFS of ₹229.75 crore.
- Price Band: The price band for the IPO has been set between ₹334 and ₹352 per share.
Important Dates
The timeline for the Godavari Biorefineries IPO is crucial for potential investors:
- IPO Open Date: October 23, 2024
- IPO Close Date: October 25, 2024
- Anchor Investor Bidding Date: October 22, 2024
- Basis of Allotment Finalization: October 28, 2024
- Expected Listing Date: October 30, 2024
Use of Funds
Proceeds from the fresh issue will primarily be utilized for debt repayment (approximately ₹240 crore) and general corporate purposes.
Investment Allocation
The IPO features a reservation structure that allocates approximately 50% of shares for qualified institutional buyers (QIBs), 35% for retail investors, and the remaining 15% for non-institutional investors. This distribution aims to ensure broad participation across different investor categories.
Lot Size and Investment Requirement
The minimum lot size for subscribing to the IPO is set at 42 shares. At the upper price band of ₹352, retail investors will need to invest approximately ₹14,784 to participate in one lot.
Financial Performance
Despite its robust position in the market, Godavari Biorefineries reported a decline in profit to ₹12.30 crore as of March 31, 2024, compared to ₹19.64 crore in the previous year. Revenue also fell from ₹2,023.08 crore to ₹1,701.06 crore year-on-year. These figures highlight some challenges facing the company amid fluctuating market conditions.
GMP Insights
As per market experts, the Grey Market Premium (GMP) for Godavari Biorefineries’ IPO is currently nil. This could indicate cautious sentiment among investors ahead of the public offering.
Should You Apply?
Investors should consider several factors before deciding whether to apply for the Godavari Biorefineries IPO:
- Market Position: As one of India’s largest ethanol producers by volume, Godavari Biorefineries has established relationships with major companies like Hindustan Coca-Cola Beverages and Hershey India.
- Use of Funds: The focus on debt repayment can strengthen the balance sheet and improve financial stability.
- Financial Performance: While recent financial results show a decline in profit and revenue, understanding the reasons behind these trends is crucial.
- Risk Factors: Consider potential risks such as dependency on raw materials like sugarcane and molasses, as well as reliance on government policies affecting ethanol sales.
Given these considerations, if you believe in the long-term growth potential of bio-based chemicals and are comfortable with the associated risks, applying for this IPO could be worthwhile.
Lead Managers and Registrar
SBI Capital Markets and Equirus Capital are acting as book-running lead managers for this IPO, while Link Intime India serves as the registrar to the offer.
Conclusion
The Godavari Biorefineries IPO presents an intriguing opportunity for investors looking to tap into India’s growing bio-based chemical sector. With its established market presence and diverse product offerings, the company aims to leverage this IPO for strategic growth initiatives. Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult with financial advisors before making investment decisions related to IPOs or any other securities.
