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.
Godavari Biorefineries Ltd Financial Status
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-
IPO 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
How to apply for IPO?
-
Login to your 5paisa account and select the issue in the
current IPO section -
Enter the number of lots and price at which you wish to
apply for -
Enter your UPI ID and click on submit. With this, your
bid will be placed with the exchange -
You will receive a mandate notification to block funds in
your UPI app -
Approve the mandate request on your UPI and funds
will be blocked