Godavari Biorefineries Limited Business Profile
The company was founded in 1956 and later in 2006; the name was changed to Godavari Biorefineries Limited. Godavari Biorefineries is a leading manufacturer of ethanol-based chemicals in India and India's largest producers of ethanol in terms of volume. The company has largest integrated bio-refinery in terms of installed capacity. Its diversified product portfolio includes sugar, different grades of ethanol, bio-based chemicals, used in various industries like food, beverages, pharmaceuticals, and personal care. As of FY24, the company has installed capacity of 570 KLPD of ethanol. It has a global presence, catering to customers from over 20 countries.
IPO Objectives: Godavari Biorefineries
The IPO offer of Godavari Biorefineries comprises of a fresh Issue and an offer for sale.
- All the money raised through offer for sale will go to selling shareholder / selling promoter and nothing from that will be entitled to the company. The offer for sale consists of up to 6,526,983 Equity Shares equivalent to Rs. 229.75 crores.
- Godavari Biorefineries IPO offer consist of a fresh issue of Rs. 325 crores. Out of total Rs. 325 crores, Rs. 240 crores will be used for pre-payment of certain borrowings. Rest of the amount will be used for general corporate purposes.
IPO Details: Godavari Biorefineries
| IPO Open Date | October 23, 2024 |
| IPO Close Date | October 25, 2024 |
| Basis of Allotment | October 28, 2024 |
| Listing Date | October 30, 2024 |
| Face Value | ₹10 per share |
| Price | ₹334 to ₹352 per share |
| Lot Size | 42 Shares |
| Total Issue Size | 15,759,938 shares |
| Aggregating up to ₹554.75 Cr | |
| Fresh Issue | 9,232,955 shares |
| Aggregating up to ₹325 Cr | |
| Offer For Sale | 6,526,983 shares of ₹10 |
| Aggregating up to ₹229.75 Cr | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Issue Size: Godavari Biorefineries IPO
The RHP of Godavari Biorefineries has been released and as per the draft, the issue price of Godavari Biorefineries has been set for Rs. 334 to Rs. 352. The IPO size is of Rs. 554.75 crores, which has fresh issue of up to Rs. 325 crores and an OFS of 6,526,983 Equity Shares.
Launch Date: Godavari Biorefineries IPO
Godavari Biorefineries IPO has been announced to open from October 23, 2024 till October 25, 2024. The shares of Godavari Biorefineries will get listed on bourses on October 30, 2024.
Financial Statement: Godavari Biorefineries
| Particulars | FY24 | FY23 | FY22 |
| Income | |||
| Revenue from operations (net) | 1686.65 | 20146.94 | 17023.29 |
| Other Income | 143.99 | 83.85 | 76.48 |
| Total income | 17010.64 | 20230.79 | 17099.76 |
| Expense | |||
| Cost of materials consumed | 15331.48 | 13129.55 | 12159.82 |
| Purchase of stock-in-trade | 123.16 | 107.49 | 140.34 |
| Decrease / (Increase) in inventories | -3484.32 | 603.14 | -415.26 |
| Employee benefit expense | 1181.84 | 1165.52 | 993.19 |
| Finance costs | 755.63 | 727.9 | 604.4 |
| Depreciation and amortization expense | 599.25 | 500.76 | 480.25 |
| Other Expenses | 2579.14 | 3678.93 | 2816.33 |
| Total expenses | 16886.18 | 19913.29 | 16779.08 |
| Restated profit before tax for the year | 124.46 | 317.5 | 320.68 |
| Restated profit for the year | 122.99 | 196.37 | 190.97 |
| Key Performance Indicator | FY24 | FY23 | FY22 |
| Revenue from Operations (₹ million) | 16866.65 | 20146.94 | 17023.2 |
| Growth in revenue from operations (%) | -16.28% | 18.35% | N.A. |
| Gross Profit (₹ million) | 5096.33 | 6306.76 | 5138.38 |
| Gross Margin (%) | 30.22% | 31.30% | 30.18% |
| EBITDA (₹ million) | 1479.35 | 1546.16 | 1405.34 |
| EBITDA Margin (%) | 8.77% | 7.67% | 8.26% |
| Profit / (loss) for the Year (₹ million) | 122.99 | 196.37 | 190.97 |
| PAT Margin (%) | 0.72% | 0.97% | 1.12% |
| Net Worth (₹ million) | 2602.45 | 2490.13 | 2325.69 |
| Return on Equity (%) | 4.73% | 7.89% | 8.21% |
| Return on Capital Employed (%) | 9.53% | 10.59% | 10.64% |
| Debt-to-Equity Ratio (times) | 2.55 | 2.96 | 2.74 |
| Net Fixed Assets Turnover Ratio (times) | 1.98 | 2.33 | 2.55 |
| Net Working Capital Days | 78.95 | 58.25 | 53.76 |
| Number of Days of Sugarcane Crushing | 150 | 131 | 153 |
| External Revenue for Sugar Segment (₹ million) | 5637.46 | 6778.44 | 5176.75 |
| Sales from Jivana Brand (₹ million) | 841.67 | 428.43 | 282.87 |
| Sugar Segment EBITDA (₹ million) | 391.06 | 610.89 | 328.16 |
| External Revenue for Cogeneration
Segment (₹ million) |
428.23 | 428.53 | 363.17 |
| Cogeneration Segment EBITDA (₹ million) | 162.88 | 160.16 | 134.24 |
| External Revenue for Bio based Chemicals Segment (₹ million) | 5055.23 | 6517.93 | 6470.74 |
| Bio based Chemicals Segment EBITDA (₹ million) | 168.6 | 73.74 | 301.8 |
| External Revenue for Distillery Segment (₹ million | 5616.95 | 6318.62 | 4906.15 |
| Distillery Segment EBITDA (₹ million) | 713.18 | 758.99 | 683.8 |
| Sugarcane crushed for the year (LMT) | 24.07 | 20.96 | 22.48 |
| Gross Recovery for the year (% | 10.78% | 11.76% | 11.60% |
| Sugar diverted for production of ethanol (%) | 27.64% | 42.18% | 36.12% |
| Power generated from Cogeneration Segment (MWHR) | 170772 | 164038 | 154782 |
Source: DRHP
Promoters & Shareholding of the Company: Godavari Biorefineries IPO
There are four promoters of Godavari Biorefineries, names and designation as per DRHP is mentioned below are:
- Samir Shantilal Somaiya (Promoters, Chairman and MD)
- Lakshmiwadi Mines and Minerals Private Limited (Corporate promoter)
- Sakarwadi Trading Company Private Limited (Corporate promoter)
- Somaiya Agencies Private Limited (Corporate promoter)
The promoters of Godavari refineries, as of filing prospectus hold 64.64% of the paid-up equity share capital of the company.
Why Invest in Godavari Biorefineries IPO?
Petrol and sugar are two sources of energy, one use to fuel vehicles and other consumer by humans and demand of both is on a rise. Product portfolio of Godavari Bio refineries is very unique seeing the demand and government objective. The company targets both customer and industries goods. They are the largest ethanol producer, with a product portfolio that includes sugar, several grades of ethanol, and so on. The government objective is to reduce the consumption of fossils fuels and shift to other sourced of energy. As of Dec 23, the government had achieved its objective of mixing 10% of ethanol into gasoline. The government has set a target of mixing 20% ethanol into gasoline by 2026.
However, before investing in any IPO, it is important to go through its pros and cons.
Competitive Strengths:
One of the largest producers of Ethanol
With installed capacity of 570 KLPD, the company ranks among the top ethanol producers in the country. Additionally, Godavari Biorefineries is the only firm in India producing bio ethyl acetate and also building first bio-based EVE production plant. Among the several Bio-based Chemicals they produce include ethyl acetate, bio-ethyl acetate, MPO, bio-acetic acid, etc.
Diversified portfolio
The company over the years has diversified its product portfolio and increased its manufacturing capacity while serving its clients. The company has mostly diversified into sugar, ethanol, and bio-based chemicals.
| Product category | FY24 | FY23 | FY22 |
| of revenue from operations (in % | |||
| Sugar | 33.42% | 33.65% | 30.41% |
| Bio-based Chemicals | 29.97% | 32.35% | 38.01% |
| Distillery | 33.30% | 31.36% | 28.82% |
| Cogeneration | 2.54% | 2.13% | 2.13% |
| Unallocated | 0.76% | 0.51% | 0.63% |
The diversification by the company has opened opportunity for new customer arena. The bio-based chemicals find application in various industries and some of the names are mentioned below.
| Particulars | FY24 | FY23 | FY22 |
| Of revenue from operations (in %) | |||
| Trading | 37.55% | 37.12% | 40.96% |
| Fuel | 28.58% | 28.09% | 25.02% |
| Beverage | 9.07% | 4.46% | 6.98% |
| Chemicals | 6.22% | 7.08% | 5.81% |
| Flavour & Fragrance | 4.76% | 7.03% | 6.40% |
| Other | 4.94% | 6.50% | 3.59% |
| Pharmaceuticals | 3.45% | 5.42% | 6.83% |
| Power | 2.52% | 2.11% | 2.13% |
In house R&D
Research and development plays important role in fulfilling customer growing needs. The company has a dedicated team of permanent research employees that identify and develop new products. They have three DSIR recognized R&D Facilities, one within each manufacturing facility and one in Navi Mumbai, Maharashtra.
Strong promoter
In order to evolve and adapt to a changing business conditions and customer preferences, side by side growing its product variety and customer reach. The company hopes to capitalize on the group's reputation, skills, and knowledge.
Risks Factors:
Dependant on a few suppliers and buyers
For converting the sugarcane into sugar and ethanol, many catalysts are used for processing of the raw material. The company sources its raw materials from a select number of third-party suppliers both domestic and abroad.
Below mentioned are top suppliers contributing, which contributes to majority of raw materials purchases.
| Particulars | FY24 | FY23 | FY22 |
| % of total raw material purchases (excluding sugarcane) | |||
| Top 3 suppliers | 68.94% | 53.49% | 72.51% |
| Top 5 suppliers | 84.10% | 66.86% | 79.58% |
| Top 10 suppliers | 94.71% | 86.45% | 89.28% |
Below mentioned is percentage distribution of top suppliers of imported raw materials with regard to purchases of total raw materials except sugarcane.
| Particulars | FY24 | FY23 | FY22 |
| of total raw material purchases (excluding sugarcane) | |||
| Purchases from three largest suppliers of imported raw materials | 55.63% | 46.97% | 69.10% |
| Purchases from five largest suppliers of imported raw materials | 57.15% | 48.37% | 69.54% |
| Purchases from ten largest suppliers of imported raw materials | 57.15% | 48.37% | 69.54% |
In this unfavorable geopolitical world, when shipped are attacked, relation between countries are damaged overnight, dependence on foreign suppliers poses great risks to the company. If any political and economic instability occurs between nations and the company is unable to find an alternative f of supplies, it may lose the ability to manufacture products in a timely or cost-effective manner.
Some of company’s product like ethanol is used as raw material in the making of final product. So like the suppliers, the company is heavily relied on a bunch of customers for a significant portion of its revenues.
| Particulars | FY24 | FY23 | FY22 |
| % of revenue from operations | |||
| Revenue from our top 5 customers | 45.47% | 38.19% | 36.31% |
| Revenue from our top 10 customers | 57.00% | 52.15% | 47.92% |
Selling to few customers comes with positive and negative. As Godavari sets it reliance on bunch of customers, it may impact its ability to competitively negotiate arrangements. The loss of any of the top customer may significantly impact their operation financials and cash flows.
Profitability dependant on raw material
Sugarcane is the base raw material for the manufacturing of sugar, ethanol, and other related products. Rainfall, planting time, MSP decided by government and sugarcane deficit, all has an impact on sugarcane prices and crops. A sugarcane crop deficit might have a direct impact on the business's operations and financials.
The firm distributes a large amount of its overall ethanol output to oil companies as part of the Indian government's ethanol blended petrol program (EBP Program).
In FY24, FY23, and FY22, revenue from the sale of ethanol from the ethanol blended petrol program (EBP) Program accounted for 28.58%, 28.11%, and 25.16% of the company's operating revenue.
Godavari Biorefineries limited IPO Grey Market Premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the GODAVARI BIOREFINERIES is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
How to Apply for GODAVARI BIOREFINERIES IPO?
To apply in GODAVARI BIOREFINERIES IPO you need to open demat account to hold your allotted shares and a trading account to sell or buy the shares into the secondary market. And not only applying in the IPO, but while buying or selling the shares in the stock market you also need both these types of accounts. Hence, you can apply here at Moneysukh to open a trading and demat account at the lowest brokerage.
Also Read: Features of Best Demat Account with Lowest Brokerage Charges in India
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Also Read: Equity or Commodity which is better for Trading or more Profitable
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Steps to Apply for GODAVARI BIOREFINERIES IPO:
Step 1: When GODAVARI BIOREFINERIES IPO opens you can bid online.
Step 2: Just go to trade.moneysukh.com and log in with your User ID & password.
Step 3: Now look for the IPO section and click on the GODAVARI BIOREFINERIES IPO.
Step 4: Here you need to fill in the required details like price, quantity, and so on.
Note: At the time of applying for the IPO, make sure to bid at the cutoff price and then submit your application.
Step 5: Now make the required payment and then submit your IPO application successfully.
How to Check GODAVARI BIOREFINERIES IPO Allotment Status?
Checking the allotment status online is very easy if you have the PAN details and IPO application number. But checking the details of the IPO allotment is possible only when the basis of allotment is arrived. In the case of GODAVARI BIOREFINERIES IPO, you can also check the allotment status through various online sources.
Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh
And the basis of the allotment is highly dependent on the oversubscription of the IPO. If the IPO is oversubscribed by many folds, then for the investors who applied through the retail category or HNI category, the chances of getting the allotment become very low. Here while applying to such over-demanding IPOs you can follow some tips to improve your chances of getting the allotment in IPO.
Also Read: How to Increase the Chances of IPO Allotment
And when due to oversubscription of IPOs, you don’t get any allotment of shares, then your money will be refunded back into your bank account or fun will be unblocked if you applied through ASBA. However, despite the oversubscribed IPO, if get the allotment then the allocated shares will be transferred into your demat account any time before the date of listing. That you can sell in the secondary market after listing or keep from the long-term investment point of view.
