Godavari Biorefineries IPO opens on October 23: Check business model, price band & more

Godavari Biorefineries Limited IPO is scheduled to open for subscription next week on Wednesday, October 23. The mainboard issue, aimed at raising nearly ₹555 core, is a combination of a fresh issue of shares and an offer-for-sale (OFS) portion.

Ahead of the opening of the initial public offering of the ethanol-based chemicals manufacturer, here are five things to know about Godavari Biorefineries IPO:

Godavari Biorefineries IPO: Offer size, price band and lot size

Godavari Biorefineries IPO, worth ₹554.75 crore, consists of a fresh issue of 92 lakh shares, aggregating to ₹325 crore, along with an offer- for-sale (OFS) portion of 65 lakh shares, amounting to ₹229.75 crore.

Godavari Biorefineries IPO price band has been fixed at ₹334 to ₹352 per share. Retail investors can place bids for a minimum lot size of 42 shares to apply for the issue, which aggregates to an investment of ₹14,784.

The minimum lot size for Small Non-Institutional Investors (sNII) is 14 lots, or 588 shares, which amounts to an investment of ₹2,06,976. The lot size for Big Non-Institutional Investors (bNIIs) is 68 lots, or 2,856 shares, amounting to an investment of ₹10,05,312.

As much as 50% of the net issue size has been set aside for the Qualified Institutional Buyers category. The company has reserved 35% of the net issue for retail individual investors and 15% for the NIIs.

Godavari Biorefineries IPO dates

Godavari Biorefineries IPO will open for subscription on October 23. The three-day bidding window will close on October 25. Godavari Biorefineries IPO share allotment status is expected to be finalised on October 28.

After the allotment of shares, refunds will be initiated for unsuccessful bidders on October 29 and successful bidders will receive shares in their demat accounts the same day.

Shares of Godavari Biorefineries will be listed on the NSE and BSE. The tentative listing date for the mainboard issue has been fixed as October 30.

Godavari Biorefineries: Financials and key competitors

Godavari Biorefineries posted a revenue of ₹525.27 crore for the quarter ended June 30, 2024 (Q1FY25). The company’s net loss stood at ₹26.11 crore for the period under review. Its net worth, at the end of the June quarter, stood at ₹233.84 crore.

Godavari Biorefineries’ revenue fell over 16% to ₹1,686 crore in FY24 against ₹2,023.08 crore in FY23. The company’s PAT declined more than 37% to ₹12.3 crore in FY24 compared to ₹19.64 crore in FY23. Godavari Biorefineries’ net worth grew over 4% to ₹260.25 in FY24 crore from ₹249.01 crore in FY23.

Godavari Biorefineries is a leading manufacturer of ethanol-based chemicals. The company makes various bio-based chemicals such as ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, bio-acetic acid and many others.

The company’s key competitors include Alkyl Amines Chemicals Limited, Jubilant Ingrevia Limited, Laxmi Organic Industries Limited, EID Parry (India) Limited, Triveni Engineering and Industries Limited, Balrampur Chini Mills Limited, Dalmia Bharat Sugar and Industries Limited, Dhampur Sugar Mills Limited and Dwarikesh Sugar Industries Limited.

Godavari Biorefineries business model

Godavari Biorefineries is a manufacturer of ethanol-based chemicals. It has two manufacturing facilities: one in the Bagalkot district in Karnataka, which has a sugarcane crushing capacity of 18,000 TCD and an installed capacity of 600 KLPD for rectified spirits, and another in the Ahmednagar district in Maharashtra with an installed capacity of 117,826.20 MTPA for bio-based chemicals.

The company uses sugarcane as raw material to manufacture a range of products. The company’s product portfolio comprises bio-based chemicals, sugar and different grades of ethanol. The products made by the company find application in a range of industries such as food, beverages, pharmaceuticals, flavours and fragrances, power, fuel, personal care and cosmetics.

The company claims it is one of India’s largest producers of ethanol in terms of volume as of March 31, 2024.

Godavari Biorefineries: Key risks and threats

• It depends on a limited number of suppliers for supply of a significant portion of raw materials other than sugarcane. The company added that failure to procure such raw materials from these suppliers can negatively impact the business.

• Godavari Biorefineries’ cost of raw materials constituted a majority of the total expenses it incurred in the three months ended June 2024. Any further increase in cost of materials consumed can have an adverse impact on the company’s profitability.

• The bio refinery depends on third party manufacturers for manufacturing and selling products under its retail brand ‘Jivana’. The company mentioned in its DRHP that any disruption in the third party manufacturers’ ability to supply these products could adversely affect the business.

• The company’s sugar, distillery and cogeneration segments are subject to seasonal vagaries which could impact its business operations.

Godavari Biorefineries: Key strengths

• The company is a manufacturer of ethanol-based chemicals and is one of the largest producers of ethanol in terms of volume in India.

• The company has a diversified product portfolio and well-established relationship with a diversified marquee customer base across industries and geographies.

• The company claims that it has well-developed in-house research and development capabilities which are registered with the Department of Scientific and Industrial Research (DSIR).

• Godavari Biorefineries is a part of the Somaiya group and claims to have an experienced promoter, board of directors and key managerial personnel.

Godavari Biorefineries IPO purpose

The company plans to utilise the net proceeds from the IPO for repayment or prepayment of certain outstanding loans. A portion of the funds will also be used for general corporate purposes.