Godavari Biorefineries Limited is coming up with an IPO size of Rs. 554.75 crore. The company is going for a combination of fresh shares of Rs. 325 crore and offer-for-sale of Rs. 229.75 crore, which will open on 23rd October 2024. The issue will close on 25th October 2024 and be listed on the stock exchange on 30th October 2024. In this article, we will explore the analysis of Godavari Biorefineries Limited IPO. Let’s dig in!
Godavari Biorefineries Limited – IPO Information
Godavari Biorefineries Limited’s GMP has not started yet; we will update this article later.
Promoter: Samir Shantilal Somaiya, Lakshmiwadi Mines and Minerals Private Limited, Sakarwadi Trading Company Private Limited, and Somaiya Agencies Private Limited
Book Running Lead Manager: Equirus Capital Private Limited, SBI Capital Markets Limited Registrar to the Offer: Link Intime India Private Limited
The Objective Of The Issue
● Rs. 240 crore is used for repayment and prepayment of certain outstanding borrowings of the company.
● The remaining will be used for general corporate purposes
Company Overview of Godavari Biorefineries Limited IPO
Godavari Biorefineries Limited was established in 1956 and is a leading manufacturer of ethanol-based chemicals in India. The company operates an integrated biorefinery with a capacity of 570 KLPD for ethanol production as of June 30, 2024. Notably, it is the largest global producer of MPO and the only Indian manufacturer of bio ethyl acetate.
The company’s diverse product portfolio includes bio-based chemicals, sugar, various grades of ethanol, and power. These products cater to industries such as food, beverages, pharmaceuticals, flavours and fragrances, power, fuel, cosmetics, and personal care. Godavari Biorefineries serves clients in over 20 countries, including Australia, China, Germany, France, Italy, Japan, Kenya, the Netherlands, Singapore, and the United States.
The company has only two manufacturing facilities located in Bagalkot, Karnataka, and Ahmednagar, Maharashtra, Godavari Biorefineries employs 1,583 permanent staff, including 52 research personnel. The company has secured 18 patents and holds 53 registrations for its products across multiple countries as of October 2024.
Financial Analysis of Godavari Biorefineries Limited IPO
Coming into the financial analysis of Godavari Biorefineries Limited, the company’s revenue has decreased from 2,014.69 crore in FY23 to 1,686.67 crore in FY24, which is down by 16.28%. Godavari Biorefineries Limited has earned revenue of 522.53 crore in Q1 of FY25.
The company has earned revenue from sugar by 33.42%, bio-based chemicals by 29.97%, Distillery by 33.30%, cogeneration by 2.54%, and unallocated by 0.76% in FY24. The company has made revenue from India by 83.35% and outside India by 16.65%
Godavari Biorefineries Limited’s net profit has decreased by 37.37%, which is from 19.64 crore in FY23 to 12.3 crore in FY24. In Q1 of FY25, the net loss of the company is to be
26.11 crore. Godavari Biorefineries Limited’s EBITDA margin has increased from 7.67% in FY23 to 8.77% in FY24. The PAT margin has declined from 0.97% to 0.72% in FY24.
In FY24, the company ROE and ROCE have to be 4.73% and 9.53%, respectively. The company increased total borrowings from Rs. 654.06 crore in March 2024 to Rs. 693.70 crore in June 2024.
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Client Base:
Godavari Biorefineries Limited’s client base includes marquee players such as Hershey India Pvt Ltd, Hindustan Coca-Cola Beverages Private Limited, M/s Karnataka Chemical Industries, M/s Techno Waxchem Pvt Ltd, LANXESS India Private Limited, IFF Inc., Ankit Raj Organo Chemicals Limited, Escorts Chemical Industries, Khushbu Dye Chem Pvt Ltd, Privi Speciality Chemicals Limited, Shivam Industries, and major oil marketing companies.
Listed Peers of the company:
Godavari Biorefineries Limited’s peer competitors are 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 & Industries Limited, Dhampur Sugar Mills Limited, and Dwarikesh Sugar Industries Limited
The below images show the comparison of peer competitors of Godavari Biorefineries Limited
Strengths of Godavari Biorefineries Limited
● The company has a diversified product portfolio that produces ethanol, chemicals, and power. Bio-chemicals contribute significantly to its revenue mix, especially bio-ethyl acetate.
● Godavari Biorefineries Limited has a long-standing history, enhancing its credibility and trust among customers and investors in the biorefinery sector.
● Godavari’s varied product offerings cater to multiple industries, providing resilience against market fluctuations and creating numerous avenues for revenue generation. ● Godavari Biorefineries Limited exports to more than 20 countries, with 17% of revenues from international sales in FY 2023.
● The company benefits from the Somaiya Group’s 80+ years of expertise. Its leadership anticipates trends and guides expansions effectively.
Weaknesses of Godavari Biorefineries Limited
● The company’s strong domestic and international footprint is relatively small, restricting access to broader markets and potential growth opportunities. ● The complexity of biorefinery processes results in elevated production costs, which may impact profitability and pricing strategies compared to conventional fuels. ● Fluctuations in raw material prices can affect operational stability, making the company vulnerable to supply chain disruptions and market volatility.
● Dependence on agricultural inputs makes the company susceptible to climate-related disruptions that could hinder production capabilities and supply chains
Conclusion:
In conclusion, Godavari Biorefineries Limited plans to raise capital through its IPO, focusing on ethanol-based production. The company’s financials are stable, but recent revenue decline raises concerns. Despite this, their diversified product range, especially in bio-based chemicals, strengthens the growth outlook. The IPO is timed to capitalize on the rising ethanol demand, positioning it as a significant player in the ethanol sector.
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