Godavari Biorefineries shares make poor debut; lists 12.5% below issue price

Godavari Biorefineries made its market debut on October 30, 2024, listing at a twelve-point-five percent discount over the issue price. Here are five key insights from the IPO listing and the company’s market strategy.

Godavari Biorefineries’ shares opened at Rs 308 on the NSE and Rs 310.55 on the BSE, falling from the issue price of Rs 352. This weaker debut reflects investor caution as broader market sentiment stays mixed.

The Rs 554.75 crore public offering was open for subscription from October 23 to October 25, closing with solid interest. Overall, the IPO was subscribed 1.76 times, receiving bids for 2.06 crore shares against the 1.10 crore shares on offer. The retail segment was subscribed 1.76 times, while qualified institutional buyers (QIBs) showed stronger interest with a 2.76 times subscription. However, the non-institutional investor (NII) category had a lukewarm response, with a 0.93 times subscription.

The offering consisted of a fresh issue of 0.92 crore shares, amounting to Rs 325 crore, and an offer for sale (OFS) of 0.65 crore shares worth Rs 229.75 crore. On October 22, 2024, the company also raised Rs 166.42 crore from anchor investors, securing early interest in the IPO. 

Proceeds from the fresh issue are primarily earmarked for debt repayment or prepayment and general corporate purposes, giving the company a strategic financial boost as it seeks to lower leverage and focus on expansion.

Founded in 1956, Godavari Biorefineries is a key player in bio-based chemicals, sugar, ethanol, and power, supplying industries such as food and beverages, pharmaceuticals, and cosmetics. The company holds 18 patents and exports to over 20 countries. Its biorefinery in Maharashtra has a 570 KLPD ethanol production capacity, and it is recognized globally as the leading MPO manufacturer by capacity. For FY24, Godavari saw a revenue decline of 15.92 percent, while its profit after tax (PAT) fell by thirty-seven-point-three-seven percent.

With this listing, Godavari Biorefineries aims to leverage its diverse product portfolio and innovative capabilities to expand its market reach and operational efficiencies.