IPO dates: October 23-25, 2024
IPO price: Rs 334-352
IPO size: Upto Rs 555 crore
Implied market cap: Upto Rs 1,801 crore
Face value: Rs10
Lot size: 42 shares
Retail portion: 35%
Godavari Biorefineries, which manufactures sugarcane based products including sugar, ethanol, and bio-based chemicals, plans to raise Rs 325 crore through an issue of fresh equity to partly repay debt and upto Rs 230 crore through an offer for sale. The promoter group stake will fall to over 63% after the IPO from 81%.
The company's products are used in various sectors including food, beverages, pharmaceuticals and cosmetics. It is among the largest producers of ethanol in the country and the largest producer of MPO (3 Methyl-3 Penten-2-One) in the world. The company’s financial performance is linked to the government regulations to some extent – it faced disruption in ethanol production for around two months in FY24 following a directive from the Ministry of Consumer Affairs, Food and Public Distribution. In addition, top five customers contributed 36-46% of revenue between FY22 and FY24, reflecting high client concentration. Given these factors, investors may wait to see a stable trend in its financials after the listing.
Business
The company has an installed capacity of 570 kilolitres per day for ethanol production. In FY24, sugar and distillery contributed 33.4% and 33.3% to revenue respectively while bio-based chemicals such as ethyl acetate and MPO among others formed 30% and the rest was from cogeneration. Exports formed 17-23% of the revenue during the period — UAE, Germany and China were key export destinations. The company has three research and development (R&D) facilities. It spent around 1% of revenue on R&D between FY22 and FY24. It has patented 18 products and processes and received 53 registrations across different countries. The company also sells products such as sugar, jaggery, salt and turmeric under the brand Jivana, which is distributed through retail and online channels. Revenue from Jivana increased three-fold to Rs 84 crore in three years to FY24.
Financials
Revenue in FY24 was Rs 168.7 crore while net profit was Rs 12.3 crore compared with Rs 170.2 crore and Rs 19.1 crore in FY22 in that order. Net debt was Rs 630.7 crore compared with Rs 590 crore while debt-equity ratio was 2.6 times compared with 2.7 times during the period. The return on networth fell to 4.7% in FY24 from 8.2% in FY22.
Valuation
The company demands a price-earnings (P/E) multiple of 146.5 based on FY24 earnings. There are no direct listed peers. Some of the sugar, ethanol producing companies trade at P/Es between 11 and 79.
IPO price: Rs 334-352
IPO size: Upto Rs 555 crore
Implied market cap: Upto Rs 1,801 crore
Face value: Rs10
Lot size: 42 shares
Retail portion: 35%
Godavari Biorefineries, which manufactures sugarcane based products including sugar, ethanol, and bio-based chemicals, plans to raise Rs 325 crore through an issue of fresh equity to partly repay debt and upto Rs 230 crore through an offer for sale. The promoter group stake will fall to over 63% after the IPO from 81%.
The company's products are used in various sectors including food, beverages, pharmaceuticals and cosmetics. It is among the largest producers of ethanol in the country and the largest producer of MPO (3 Methyl-3 Penten-2-One) in the world. The company’s financial performance is linked to the government regulations to some extent – it faced disruption in ethanol production for around two months in FY24 following a directive from the Ministry of Consumer Affairs, Food and Public Distribution. In addition, top five customers contributed 36-46% of revenue between FY22 and FY24, reflecting high client concentration. Given these factors, investors may wait to see a stable trend in its financials after the listing.
Business
The company has an installed capacity of 570 kilolitres per day for ethanol production. In FY24, sugar and distillery contributed 33.4% and 33.3% to revenue respectively while bio-based chemicals such as ethyl acetate and MPO among others formed 30% and the rest was from cogeneration. Exports formed 17-23% of the revenue during the period — UAE, Germany and China were key export destinations. The company has three research and development (R&D) facilities. It spent around 1% of revenue on R&D between FY22 and FY24. It has patented 18 products and processes and received 53 registrations across different countries. The company also sells products such as sugar, jaggery, salt and turmeric under the brand Jivana, which is distributed through retail and online channels. Revenue from Jivana increased three-fold to Rs 84 crore in three years to FY24.
Financials
Revenue in FY24 was Rs 168.7 crore while net profit was Rs 12.3 crore compared with Rs 170.2 crore and Rs 19.1 crore in FY22 in that order. Net debt was Rs 630.7 crore compared with Rs 590 crore while debt-equity ratio was 2.6 times compared with 2.7 times during the period. The return on networth fell to 4.7% in FY24 from 8.2% in FY22.
Valuation
The company demands a price-earnings (P/E) multiple of 146.5 based on FY24 earnings. There are no direct listed peers. Some of the sugar, ethanol producing companies trade at P/Es between 11 and 79.
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