The initial public offering (IPO) of Godavari Biorefineries Ltd, an ethanol-based chemical manufacturer, opened for subscription on October 23, 2024, and will remain open until October 25, 2024. The IPO is aimed at raising ₹554.75 crore through a combination of fresh issue and offer for sale (OFS).
As the subscription period enters Day 2, investor demand appears moderate, with the public issue subscribed just 0.37 times by the morning of October 24, 2024.
Key IPO Details
Godavari Biorefineries, based in Maharashtra, is a leading player in the ethanol-based chemical sector. The company has diversified its product portfolio to include bio-based chemicals, sugar, ethanol, and power, with applications in various industries like food, pharmaceuticals, personal care, and fuel.
The IPO comes at a time when the demand for ethanol-based products is expected to rise, positioning Godavari to benefit from long-term growth trends.
Godavari Biorefineries IPO Details
| IPO Details | Information |
|---|---|
| Price Band | ₹334 to ₹352 per share |
| Issue Size | ₹554.75 crore |
| Fresh Issue | ₹325 crore |
| Offer for Sale (OFS) | ₹229.75 crore |
| Allotment Date | October 26, 2024 |
| Listing Date | October 30, 2024 |
| Exchanges | BSE, NSE |
Godavari Biorefineries IPO Subscription Status (Day 2)
As of the morning of October 24, 2024, the Godavari Biorefineries IPO has received bids for approximately 0.37 times the total shares on offer. Here’s the breakdown of the subscription status by investor category:
- Retail Investors: 0.66 times subscribed
- Non-Institutional Investors (NII): 0.16 times subscribed
- Qualified Institutional Buyers (QIBs): Minimal participation so far
Godavari Biorefineries IPO GMP (Grey Market Premium)
The Grey Market Premium (GMP) for Godavari Biorefineries shares remains neutral as of Day 2, trading at par with the issue price. The neutral GMP reflects mixed sentiment in the market, likely influenced by weak market conditions and concerns about the stock’s high price-to-earnings (P/E) ratio.
Should You Invest in Godavari Biorefineries IPO?
Analyst Reviews:
- StoxBox: Research analysts at StoxBox have given Godavari Biorefineries a “subscribe” rating, citing the company’s diversified portfolio and strong presence in the ethanol-based chemicals sector. With the Indian ethanol market expected to grow at a compound annual growth rate (CAGR) of 20% over the next five years, Godavari is well-positioned to capitalize on this opportunity.
- Hensex Securities: Experts at Hensex Securities also recommend subscribing to the IPO for medium to long-term gains. They highlight the company’s well-established relationships with a diversified customer base across industries and its plans to reduce debt, which could strengthen its balance sheet.
Key Considerations:
- Growth Potential: The ethanol-based chemical industry is set to grow rapidly in the coming years, and Godavari’s strong market presence positions it well for future gains.
- Debt Reduction: The company plans to use a portion of the IPO proceeds to reduce its debt, which will improve its financial stability and support long-term growth.
- High Valuation: Some analysts are concerned that the high P/E ratio of 120.1x for FY24 makes it a riskier investment in the short term.
Conclusion:
Godavari Biorefineries IPO presents a solid investment opportunity for long-term investors who are confident in the growth potential of the ethanol-based chemicals industry. However, the high valuation and neutral GMP suggest that investors should proceed with caution and consider the medium to long-term horizon when making their decision.
Disclaimer
The information provided in this article is based on the latest market trends and analyst reviews. Investors should consult a financial advisor before making any investment decisions.