Godavari Biorefineries IPO Launches Today: Key Dates, GMP Update, and Expert Opinions—Should You Invest?

The initial public offering (IPO) of Godavari Biorefineries Ltd, a company known for producing ethanol and bio-based chemicals, started today, October 23, and will close on October 25.

A day before the IPO opened, on October 22, the company raised over ₹166 crore from anchor investors. Some of the notable investors include HDFC Mutual Fund, Whiteoak Capital Fund, Goldman Sachs (Singapore), Societe General, and SBI General Insurance.

Key Details of the Godavari Biorefineries IPO

• Price Range: ₹334 to ₹352 per share.
• Lot Size: Minimum 42 shares, with multiples of 42 shares after that.

The IPO has reserved:

• 50% of the shares for qualified institutional buyers (QIB),
• 15% for non-institutional investors (NII),
• 35% for retail investors.

Godavari Biorefineries, based in Maharashtra, is a leading producer of ethanol-based chemicals in India. Its product range includes bio-based chemicals, sugar, different grades of ethanol, and power generation.

What Analysts Say About the IPO

Systematix Institutional Equities

This brokerage recommends subscribing to the IPO. They cite the government’s supportive ethanol policies and the rising demand for safer, bio-based chemicals as positive factors. The brokerage also believes that the government’s goal of 20% ethanol blending in fuel will benefit the company.

They further highlight the company’s focus on clean chemistry, supported by strong in-house research and development.

At the top end of the price band, the company’s valuation is 15.7 times its FY24 EV/EBITDA, compared to its competitors:

• Balrampur Chini (18.9 times),
• Triveni Engineering (16.9 times),
• Dalmia Bharat Sugars (12.3 times).

Swastika Investmart Ltd

This brokerage is neutral on the IPO, noting several challenges. While Godavari Biorefineries is the largest global producer of MPO (a type of chemical) and a major player in ethanol-based specialty chemicals, the firm is burdened with high debt and financial difficulties.

Swastika Investmart believes the IPO is overpriced and recommends that only long-term investors, who are aware of the risks, should consider subscribing.

Godavari Biorefineries IPO Details

The IPO consists of two parts:

1. A fresh issue of shares worth ₹325 crore.
2. An Offer for Sale (OFS) of 65.27 lakh shares, amounting to ₹230 crore.

The fresh issue will raise ₹240 crore to help the company reduce its debt, with the rest being used for general corporate purposes.

Godavari Biorefineries Grey Market Premium (GMP)

Currently, the Grey Market Premium (GMP) for the Godavari Biorefineries IPO is ₹0, meaning that shares are trading at their issue price with no extra premium in the grey market.

Experts predict that this trend will likely continue until the listing day, based on the grey market activity over the past week.

Conclusion

The Godavari Biorefineries IPO offers an opportunity for investors, especially those who are optimistic about the ethanol and bio-based chemicals sector. However, potential investors should carefully consider the company’s financial situation before subscribing.