Godavari Biorefineries IPO: Price band: ₹334-₹352

Godavari Biorefineries Limited, incorporated in 1956, manufactures ethanol-based chemicals in India. As of June 30, 2024, the company operates an integrated biorefinery with a capacity of 570 KLPD for ethanol production. The company is the largest producer of MPO in the world based on installed capacity and one of only two manufacturers of natural 1,3-butanediol globally. It is also the only company in India that makes bio ethyl acetate. The company's product portfolio includes bio-based chemicals, sugar, various grades of ethanol, and power, serving industries such as food, beverages, pharmaceuticals, flavours and fragrances, power, fuel, personal care, and cosmetics.

The Objectives of the Issue

The Company intends to utilize the Net Proceeds from the Fresh Issue towards funding the following objects:

• Repayment/pre-payment, in full or in part, of certain outstanding borrowings availed by the Company
• General corporate purposes

Highlights of Godavari Biorefineries IPO

Godavari Biorefineries IPO is set to launch with a book-built issue of ₹554.75 crores. The issue is a combination of fresh issue and offer for sale. Here are the key details of the IPO:

• The IPO opens for subscription on 23rd October 2024 and closes on 25th October 2024.
• The allotment is expected to be finalised on 28th October 2024.
• Refunds will be initiated on 29th October 2024.
• Credit of shares to Demat accounts is also expected on 29th October 2024.
• The company will tentatively list on BSE and NSE on 30th October 2024.
• The price band is set at ₹334 to ₹352 per share.
• The fresh issue comprises 0.92 crore shares, aggregating to ₹325.00 crores.
• The offer for sale comprises 0.65 crore shares, aggregating to ₹229.75 crores.
• The minimum lot size for the application is 42 shares.
• Retail investors need to invest a minimum of ₹14,784.
• The minimum investment for small NII (sNII) is 14 lots (588 shares), amounting to ₹206,976.
• The minimum investment for big NII (bNII) is 68 lots (2,856 shares), amounting to ₹1,005,312.
• Equirus Capital Private Limited and SBI Capital Markets Limited are the book running lead managers for the IPO.
• Link Intime India Private Ltd serves as the registrar.

Godavari Biorefineries IPO - Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 25th October 2024. This deadline is crucial for investors to ensure their applications are processed successfully. Investors are advised to complete their applications well before this deadline to avoid any last-minute technical issues or delays.

Godavari Biorefineries IPO Issue Details/Capital History

Godavari Biorefineries IPO is scheduled from 23rd October to 25th October 2024, with a price band of ₹334 to ₹352 per share and a face value of ₹10. The total issue size is 1,57,59,938 shares, raising up to ₹554.75 crores through a combination of fresh issue and offer for sale. The IPO will be listed on BSE and NSE. The pre-issue shareholding is 4,19,43,023 shares, and the post-issue shareholding will be 5,11,75,978 shares.
 

Godavari Biorefineries IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can place bids for a minimum of 42 shares, with additional bids required in multiples of this figure. The table below illustrates the minimum and maximum investment amounts for retail investors and HNIs, expressed in shares and monetary values.

SWOT Analysis: Godavari Biorefineries Ltd

Strengths:

• Largest producer of MPO in the world based on installed capacity
• Only manufacturer of bio ethyl acetate in India
• Diverse product portfolio serving various industries
• Strong research and development capabilities with 18 patents
• Global presence serving customers in over twenty countries

Weaknesses:

• High dependence on ethanol-based products
• Concentration of manufacturing facilities in two locations

Opportunities:

• Growing demand for bio-based chemicals globally
• Potential for expansion into new markets and product lines
• Increasing focus on sustainable and eco-friendly products

Threats:

• Fluctuations in raw material prices, particularly sugar cane
• Regulatory changes affecting ethanol production and pricing
• Intense competition in the global chemical industry

Financial Highlights: Godavari Biorefineries Ltd

Below are the consolidated financial results for recent periods:

Godavari Biorefineries Limited has shown challenging financial performance in recent periods. 
The company's revenue decreased by 15.92%, and profit after tax (PAT) dropped by 37.37% between the financial year ending on 31st March 2024 and 31st March 2023. Revenue declined from ₹20,230.79 lakh in FY23 to ₹17,010.64 lakh in FY24, marking a decrease of 15.92%. 

The company's profitability has also been impacted, with PAT decreasing from ₹196.37 lakh in FY23 to ₹122.99 lakh in FY24. Moreover, the company reported a loss of ₹261.06 lakh in the quarter ending June 30, 2024.

Net Worth has shown modest growth, increasing from ₹2,325.69 lakh in FY22 to ₹2,602.45 lakh in FY24, representing an increase of about 11.9% over two years. However, it decreased to ₹2,338.43 lakh as of 30th June 2024. 

Total Borrowings have fluctuated, increasing from ₹6,367.21 lakh in FY22 to ₹7,037.46 lakh as of 30th June 2024, representing an increase of about 10.5% over this period.

The company's financial performance shows a challenging trend with declining revenue and profitability. The Debt-to-Equity Ratio stood at 3.01 as of 30th June 2024, indicating a high level of leverage. 

Investors should carefully consider these financial trends, particularly the recent decline in revenue and profitability. It's important to understand the factors contributing to these challenges and the company's strategies to address them. Potential investors should also evaluate the company's market position, industry dynamics, and future growth prospects when considering the IPO. As always, past performance doesn't guarantee future results, and investment decisions should be made based on a comprehensive analysis of all available information.