Godavari Biorefineries Ltd IPO

Upcoming DRHP

IPO Synopsis

IPO synopsis:
Ethanol producer, Godavri Biorefineries, filed its DRHP with SEBI on 24th September, 2021. The issue comprises of a fresh issue worth Rs.370 crore and an offer for sale of up to 65,58,278 equity shares. In the offer for sale, Samir Shantilal Somaiya and Somaiya Agencies are offloading 5 lakh equity shares each, Mandala Capital is offloading 49.27 lakh equity shares, 3 lakh equity shares are being offloaded by Filmedia Communication Systems, Somaiya Properties and Investments are offloading around 1.31 lakh equity shares and lastly, Lakshmiwadi Mines and Minerals are offloading 2 lakh equity shares.
A pre-IPO placement of shares worth Rs.100 crore is being considered by the company. This will lead to the decrease in the amount of fresh issue. The book running lead managers to the issue are JM Financial Ltd and Equirus Capital Private Ltd. 

Objectives of the issue:
1.    Rs.214 crore is to be kept aside to repay or prepay any debt availed by the company
2.    Rs.44.84 is to be used to fund the capital expenditure for sugarcane crushing expansion
3.    Rs.10.62 is to be used to fund the capital expenditure for the potash unit
 

About Godavari Biorefineries Ltd

Godavari Biorefineries has the largest integrated bio-refinery in the country and is also the largest ethanol producer in India. The company is also one of the only two manufacturers of natural 1, 3 butylene glycol globally. They are also the fourth largest manufacturer of ethyl acetate in the country. Godavari is a part of the Somaiya group of companies and has been operational in the sugar industry for the last 8 decades and a 6 decade experience in the bio-based chemicals industry.
The company has two manufacturing facilities, one in Karnataka and one in Maharashtra. The customers of the company include renowned players like Cipla, Biocon, Dr. Reddy’s laboratories, Hershey India Pvt Ltd etc. Their customers span across 20 countries including Australia, China, France, Germany, Itlay, Japan, Kenya, Netherlands, Nigeria, Singapore, Switzerland, UK, United Arab Emirates and USA. According to the DRHP, the company has patented 13 products and processes and 41 registrations across countries. 
 

Financials:

 

Particulars

(In Rs cr)

FY21

FY20

FY19

Revenue from operations

1,538.17

1,459.15

1,552.23

Revenue from ethanol (%)

21.28%

16.83%

11.94%

Revenue from bio-based chemicals (%)

34.96%

31.22%

39.26%

PAT

27.15

4.06

5.53

EBITDA

165.83

116.98

146.16

EPS (In Rs)

6.47

1

1.46

 

Particulars

(In Rs cr)

FY21

FY20

FY19

Total Assets

1,441.7

1,434.5

846.11

Total Borrowings

563.38

604.12

800.90

Equity Share Capital

41.95

41.95

38.38

 

 

Peer comparison:

 

Key companies in the ethanol market

Company

Distillery capacity (KLPD)

Cane Crushing capacity (TCD)

Shree Renuka Sugars Ltd

970

94,520

Bajaj Hindustan Sugar

800

96,000

Balrampur Chini Mills

520

76,500

India Glycols

425

5,500

Godavari Biorefineries Ltd

400

15,000

Dhampur Sugar Mills Ltd

400

45,500

Triveni Engineering & Industries

320

61,000

E.I.D Parry India

234

45,800

Dalmia Bharat Sugar

220

22,500

Simbhaoli Sugars

210

9,500

Avadh Sugar and energy

200

31,200

Mawana Sugars

120

29,500

HPCL Biofuels Ltd

60

3,500

Dwarikesh Sugar Industries

30

21,500

 

Companies in the sugar market:

Companies

Revenue

(In Rs cr)

Bajaj Hindustan Sugar

6,672

Shree Renuka Sugars Ltd

5,462

Balrampur Chini Mills

4,812

Triveni Engineering & Industries

4,703

Dhampur Sugar Mills Ltd

4,232

Avadh Sugar and energy

2,711

Dalmia Bharat Sugar

2,686

E.I.D Parry India

2,024

Dwarikesh Sugar Industries

1,839

Uttam Sugar Mills Ltd

1,819

Bannari Amman Sugars Ltd

1,561

Godavari Biorefineries

1,538

Mawana Sugars Ltd

1,469

Ugar Sugar Works Ltd

1,118


The Key points are-

Key Points

  • Strengths

    1.    Godavari Biorefineries is the largest producer of ethanol in India, with an installed capacity of 380 KLPD as on 30 June, 2021 and a capacity utilization of 58.87% for Q1 ended 30 June, 2021
    2.    They are a fully integrated refinery and use sugarcane as a primary feedstock in order to manufacture an array of products like sugar, chemicals, ethanol etc. According to reports, they are the only company in India to have such a wide portfolio of products
    3.    Well-developed in-house research with 38 researchers employed by them as on 30 June, 2021 and 7 of these 38 have a doctorate
    4.    They are a part of the Somiaya group and have very experienced promoters in their company
     

  • Risks

    1.    The main feed stock of the company is sugarcane, which susceptible to vagaries of the season, crop disease and pest attacks
    2.    The company depends on a few suppliers for a majority of the raw material. Any failure to avail of the raw materials will materially affect the business and operations
    3.    A significant amount of revenue is derived from a few products and any failure in these will adversely affect the operations and financials of the company
    4.    Inability to commercialize on new products which are launched after a long period of research and development will adversely impact the growth of the business
     

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