Retail Research IPO Note
Sector: Diversified (Sugar/Chemicals) Price Band (Rs): 334 - 352
21st October 2024
Godavari Biorefineries Ltd.
Company Overview: Issue Details
Date of Opening 23rd October 2024
Godavari Biorefineries Ltd (GBL) is a leading Indian manufacturer of ethanol- Date of Closing 25th October 2024
based chemicals, operating an integrated bio-refinery with a 570 KLPD ethanol Price Band (Rs) 334 – 352
production capacity as of 1QFY25. By FY24, GBL was one of India's largest Offer for sale 65,26,983 shares
ethanol producers by volume and the world’s largest manufacturer of MPO (3 Fresh Issue (Rs cr) 325
Methyl-3 Penten-2-One) by installed capacity. The company boasts a Issue Size (Rs cr) 543 – 555
diversified product portfolio that includes bio-based chemicals, sugar, various No. of shares 1,62,57,222 – 1,57,59,938
grades of ethanol, and power, which serve a wide range of industries such as Face Value (Rs) 10
food, beverages, pharmaceuticals, flavors and fragrances, power, fuel, Post Issue Market Cap
personal care, and cosmetics. GBL operates two manufacturing facilities with 1,726 – 1-801
(Rs cr)
a total capacity of 18,000 TCD for sugar, 570 KLPD for ethanol, and 600 KLPD
BRLMs Equirus Capital, SBI Capital Markets
for rectified spirits. Utilizing sugarcane as a feedstock, the company produces
an array of products, including sugar, ethanol, bio-based chemicals, and Registrar Link Intime Pvt Ltd
power. GBL was also one of the first companies in India to use sugarcane juice Bid Lot 42 shares and in multiple thereof
and syrup for ethanol production.
QIB shares 50%
Key Highlights: Retail shares 35%
NIB shares 15%
1. Diversified product portfolio: The company over the years has diversified
its manufacturing capabilities and product portfolio, which primarily includes Objects of Issue
bio-based chemicals, sugar and ethanol. GBL has the widest portfolio of bio- Estimated
based products in India. Its products find applications in various industries utilization from net
including personal care & cosmetics, flavor and fragrance, food, fuel, paints & proceeds (Rs cr)
coatings and pharmaceutical industries. Ethanol manufactured by the Repayment or pre-payment in full or in
company is sold to oil-marketing companies and also finds its applications in part of outstanding borrowings availed 240.0
beverage, pharmaceutical and chemical industry. Through the diversified by the company
offerings GBL has reduced its dependence on any specific product category. General Corporate Purposes^
Total proceeds from fresh issue 325.0
2. Marquee customer base: The company’s products find its applications ^ To be finalized upon determination of the Offer Price and
across various industries and some of GBL’s key customers include marquee updated in the Prospectus prior to filing with the RoC. The
players such as Hershey India, Hindustan Coca-Cola Beverages, M/s Karnataka amount utilized for general corporate purposes shall not exceed
Chemical Industries, M/s Techno Waxchem, LANXESS India, IFF Inc, Khushbu 25% of the gross proceeds.
Dye Chem, and Privi Specialty Chemicals. The company also has robust
international presence with customers spread across the world including Shareholding Pattern
Australia, China, Germany, France, Italy Japan, Kenya, Netherlands, Singapore, Pre-Issue No. of Shares %
United Kingdom, United Arab Emirates, Indonesia and United States of Promoter & Promoter Group 3,40,00,110 81.1
America. Public & Others 79,42,913 18.9
Total 4,19,43,023 100.0
3. Robust manufacturing facilities: The company operates 2 manufacturing
facilities i) Bagalkot, Karnataka (Sameerwadi) and ii) Ahmednagar,
Maharashtra (Sakarwadi) with total capacity of 18,000 TCD for sugar, 570 KLPD Post Issue @Lower Price Band No. of Shares %
for ethanol and 600 KLPD for rectified spirits. Sugarcane feed which is the basic Promoter & Promoter Group 3,24,00,110 62.7
raw material is processed at the Sameerwadi facility for manufacturing of sugar Public & Others 1,92,73,452 37.3
and Ethanol and press mud which is intended to be utilized for the Total 5,16,73,562 100.0
manufacturing of compressed biogas. GBL has the ability to divert syrup/juice
to produce different grades of ethanol which helps it create optionality
Post Issue @Upper Price Band No. of Shares %
between production of sugar and ethanol. Such flexibility helps the company
to adapt to changing market dynamics and modify its product mix to optimize Promoter & Promoter Group 3,24,00,110 63.3
realizations and margins. Public & Others 1,87,75,868 36.7
Total 5,11,75,978 100.0
Valuation: Godavari Biorefineries is valued at EV/EBITDA of 15.7x and P/E of
146x at the upper price band. The company has a diverse product portfolio, Source: RHP, SSL Research
including bio-based chemicals, sugar, ethanol, and power. It operates two
manufacturing facilities and holds 18 patents and 53 registrations,
underscoring its focus on innovation and global expansion. With a 570 KLPD
ethanol biorefinery, a strong client base (Hershey India, Coca-Cola), and
exports to over 20 countries, the company is well-positioned in the market.
For the list of our branches refer to the website: www.sbisecurities.in
Godavari Biorefineries Ltd Diversified (Sugar/Chemicals)
Key Financials
Particulars (Rs cr) FY22 FY23 FY24 1QFY25
Revenue from operation 1,702.3 2,014.7 1,686.7 522.5
EBITDA 132.9 146.2 133.5 (12.2)
PAT 19.1 19.6 12.3 (26.1)
EBITDA Margin (%) 7.8 7.3 7.9 -
PAT Margin (%) 1.1 1.0 0.7 -
ROE (%) 4.0 4.0 2.5 -
ROCE (%) 8.3 8.5 7.6 -
PE (x)* 77.3 75.2 120.0 -
*Note: Pre-Issue P/E based on upper-price band
Source: RHP, SSL Research
Risk Factors
• Procurement risk: The company sources its raw materials (special denatured spirit, acetic acid, methyl ethyl ketone
and molasses) from a limited number of third-party suppliers from various geographies including India, USA and UAE.
The company does not have any long-term contracts with suppliers and any failure to procure raw materials from these
suppliers may have an adverse impact on manufacturing operations and results of operations.
• Input price risk: In FY22/FY23/FY24/1QFY25 the company’s cost of materials consumed as a % of revenue stood at
70.8%/69.5%/69.7%/79.6% respectively. Any increases in costs of materials consumed or inability to reasonably offset
the costs with the prices of products may have an adverse impact on profitability and result of operations.
• Customer concentration risk: The company derived 47.9%/52.2%/57.0%/46.8% of its FY22/FY23/FY24/1QFY25
revenue respectively from its Top 10 customers. Any loss of customers, deterioration of the customers financial
condition or a reduction in demand for the company’s products may adversely affect business, results of operations,
financial condition and cash flows.
• Product concentration risk: The company derives a majority of its revenue from the sale of sugar, ethyl acetate, ethanol
and MPO. The company’s revenues from these products may decline as a result of increased competition, pricing
pressures, fluctuations in demand for and/or supply of products which may adversely affect our business, financial
condition and results of operations.
Growth Strategy
• Continue to diversify product offerings and improve operational efficiency.
• Implement additional measures for improving feedstock security and increasing value derived from the feedstock.
• Increase wallet share from existing customers and further diversify the customer base.
• Reduction of borrowings and leverage.
• Continued focus on implementation of sustainable practices and strengthening control over inputs.
SBI Securities 2
Godavari Biorefineries Ltd Diversified (Sugar/Chemicals)
Revenue Mix – Product wise
FY22 FY23 FY24 1QFY25
Particulars % Of % Of % Of % Of
Rs cr Rs cr Rs cr Rs cr
Revenue Revenue Revenue Revenue
Sugar 517.7 30.4 677.8 33.6 563.7 33.4 220.5 42.2
Bio-based Chemicals 647.1 38.0 651.8 32.4 505.5 30.0 146.0 27.9
Distillery 490.6 28.8 631.9 31.4 561.7 33.3 136.4 26.1
Cogeneration 36.3 2.1 42.9 2.1 42.8 2.5 13.9 2.7
Unallocated 10.6 0.6 10.3 0.5 12.9 0.8 5.7 1.1
Total 1,702.3 100.0 2,014.7 100.0 1,686.7 100.0 522.5 100.0
Source: RHP, SSL Research
Revenue Mix – Geographical split
FY22 FY23 FY24 1QFY25
Particulars % of % of % of % of
Rs cr Rs cr Rs cr Rs cr
Revenue Revenue Revenue Revenue
India 1,314.0 77.2 1,612.2 80.0 1,405.8 83.3 442.9 84.8
UAE 79.2 4.7 92.7 4.6 155.2 9.2 40.2 7.7
Germany 17.4 1.0 39.2 1.9 30.3 1.8 5.9 1.1
China 57.6 3.4 43.0 2.1 28.7 1.7 3.5 0.7
USA 55.6 3.3 95.0 4.7 13.3 0.8 14.2 2.7
Singapore 73.4 4.3 97.4 4.8 9.2 0.5 0.4 0.1
Others 105.0 6.2 35.2 1.7 44.1 2.6 15.5 3.0
Total 1,702.3 100.0 2,014.7 100.0 1,686.7 100.0 522.5 100.0
Source: RHP, SSL Research
SBI Securities 3
Godavari Biorefineries Ltd Diversified (Sugar/Chemicals)
Industry Overview
The Indian Ethanol Market is projected to grow from USD 7.0 bn in FY23 to USD 17.5 bn by FY28E, exhibiting a CAGR of 20.0%
between FY23-FY28E on the back of increasing ethanol use in applications such as fuel additives, disinfectants, and beverages.
The Indian government over the past 5 years actively promoted the expansion of ethanol capacity under the National Policy
on Biofuels 2018 aiming to reduce the country's reliance on imported crude oil while utilizing surplus sugar stocks for ethanol
production, thereby addressing both energy security and agricultural surplus management.
Indian Ethanol Market (USD bn)
20.0
17.5
14.6
15.0
12.2
10.1
10.0 8.4
7.0
5.0
-
FY23A FY24E FY25E FY26E FY27E FY28E
Source: RHP, SSL Research
Indian Ethyl Acetate Market stood at USD 524.1 mn in FY23 and is expected to grow at a CAGR of 11.2% between FY23-FY28E
to reach USD 890.4 mn by FY28E. India is a net exporter of ethyl acetate, mainly exporting to the Europe, Middle East, and
Africa. This positive trade balance gives an advantage to Indian players in exploring high-end markets such as Europe where
more than half the Ethyl Acetate trade takes place.
Indian Ethyl Acetate Market (USD mn)
1,000.0
890.4
900.0
800.9
800.0
720.3
700.0
647.9
582.7
600.0
524.1
500.0
FY23A FY24E FY25E FY26E FY27E FY28E
Source: RHP, SSL Research
SBI Securities 4
Godavari Biorefineries Ltd Diversified (Sugar/Chemicals)
Financial Snapshot
INCOME STATEMENT
(Rs cr) FY22 FY23 FY24
Revenue from Operations 1,702 2,015 1,687
YoY growth (%) - 18.3% -16.3%
Cost Of Revenues (incl Stock Adj) 1,188 1,384 1,177
Gross Profit 514 631 510
Gross margins (%) 30.2% 31.3% 30.2%
Employee Cost 99 117 118
Other Operating Expenses 282 368 258
EBITDA 133 146 134
EBITDA margins (%) 7.8% 7.3% 7.9%
Other Income 8 8 14
Interest Exp. 60 73 76
Depreciation 48 50 60
PBT 32 32 12
Exceptional item/Extraordinary item 0 0 0
Tax 13 12 0
PAT 19 20 12
PAT margin (%) 1.1% 1.0% 0.7%
EPS 4.6 4.7 2.9
BALANCE SHEET
(Rs cr) FY22 FY23 FY24
Assets
Net Block 666 865 849
Capital WIP 44 8 16
Intangible Assets 0 1 1
Intangible Assets under development 7 9 12
Right of use assets 1 0 0
Other Non-current Assets 37 36 37
Current Assets
Inventories 652 519 805
Trade receivables 173 202 190
Cash and Bank Balances 47 45 33
Other Current Assets 108 58 49
Total Current Assets 979 824 1,076
Current Liabilities & Provisions
Trade payables 574 400 630
Other current liabilities 33 88 177
Short-term provisions 4 5 4
Total Current Liabilities 611 493 811
Net Current Assets 368 331 266
Total Assets 1,122 1,250 1,181
Liabilities
Share Capital 42 42 42
Reserves and Surplus 431 448 459
Total Shareholders Funds 473 489 501
Minority Interest - - -
Total Debt 635 735 654
Long Term Provisions 1 2 2
Lease Liabilities 1 1 1
Other Long-Term Liabilities 1 1 2
Net Deferred Tax Liability 11 22 22
Total Liabilities 1,122 1,250 1,181
SBI Securities 5
Godavari Biorefineries Ltd Diversified (Sugar/Chemicals)
Cash flow (Rs cr) FY22 FY23 FY24
Cash flow from Operating Activities 45 197 187
Cash flow from Investing Activities (48) (214) (44)
Cash flow from Financing Activities 6 28 (151)
Free Cash Flow (6) (20) 131
RATIOS
FY22 FY23 FY24
Profitability
Return on Assets (%) 1.1 1.1 0.6
Return on Capital Employed (%) 8.3 8.5 7.6
Return on Equity (%) 4.0 4.0 2.5
Margin Analysis
Gross Margin (%) 30.2 31.3 30.2
EBITDA Margin (%) 7.8 7.3 7.9
Net Profit Margin (%) 1.1 1.0 0.7
Short-Term Liquidity
Current Ratio (x) 1.1 1.1 1.0
Quick Ratio (x) 0.4 0.4 0.2
Avg. Days Sales Outstanding 37 37 41
Avg. Days Inventory Outstanding 140 94 174
Avg. Days Payables 123 72 136
Fixed asset turnover (x) 2.6 2.3 2.0
Debt-service coverage (x) 0.1 0.1 0.1
Long-Term Solvency
Total Debt / Equity (x) 1.3 1.5 1.3
Interest Coverage Ratio (x) 1.5 1.4 1.2
Valuation Ratios
EV/EBITDA (x) 15.5 14.8 15.7
P/E (x) 77.3 75.2 120.0
P/B (x) 3.1 3.0 2.9
EV/Sales (x) 1.2 1.1 1.2
Source: RHP, SSL Research
SBI Securities 6
Godavari Biorefineries Ltd Diversified (Sugar/Chemicals)
Peer Comparison
Godavari Alkyl Amines Jubilant Ingrevia Balrampur Chini Dhampur Sugar
Particulars (Rs cr)
Biorefineries Ltd Chemicals Ltd Ltd Mills Ltd Mills Ltd
CMP 352.0 2,176.0 731.0 633.0 202.0
Sales 1,686.7 1,440.6 4,135.8 5,594.0 2,646.8
EBITDA 133.5 265.8 456.4 786.0 293.4
Net Profit 12.3 148.9 182.9 534.0 134.5
Mkt Cap. 1,801.4 11,126.0 11,646.0 12,772.0 1,318.0
Enterprise Value 2,097.9 11,097.0 12,306.0 14,778.0 2,279.0
EBITDA Margin (%) 7.9 18.4 11.0 14.1 11.1
Net Margin (%) 0.7 10.3 4.4 9.5 5.1
PE (x) 146.5 74.7 63.7 23.9 9.8
EV/EBITDA (x) 15.7 41.8 27.0 18.8 7.8
RoE (%) 2.5 11.8 6.7 13.8 12.2
RoCE (%) 7.6 16.3 9.2 13.5 11.4
EV/Sales 1.2 7.7 3.0 2.6 0.9
The data is based on FY24 financial data.
For Godavari Biorefineries Limited the Market cap, EV/EBITDA (x), P/E (x) and EV/Sales (x) are calculated on post-issue equity share capital based on the upper price
band.
CMP as on 21st October, 2024.
Source: RHP, SSL Research
SBI Securities 7
Godavari Biorefineries Ltd Diversified (Sugar/Chemicals)
SBICAP Securities Limited
(CIN): U65999MH2005PLC155485 I Research Analyst Registration No INH000000602
SEBI Registration No.: Stock Broker: INZ000200032 | CDSL: IN-DP-314-2017 | NSDL: IN-DP-NSDL-369-2014 | Research Analyst: INH000000602
IRDA/RW/IR2/2015/081 | IRDA/RW/IR1/2016/041 | IRDA: CA0103
Registered & Corporate Office: Marathon Futurex, A Wing, 12th Floor, N. M. Joshi Marg, Lower Parel, Mumbai-400013.
For any information contact us:
022-6854 5555
E-mail: [email protected] I Web: www.sbisecurities.in
DISCLOSURES & DISCLAIMERS:
Analyst Certification: The views expressed in this research report ("Report") accurately reflect the personal views of the research analysts ("Analysts") employed by SBICAP
Securities Limited (SSL) about any and all of the subject issuer(s) or company(ies) or securities. This report has been prepared based upon information available to the public
and sources, believed to be reliable. I/We also certify that no part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)
or view(s) in this report.
The Analysts engaged in preparation of this Report or his/her relative:-
(a) do not have any financial interests in the subject company mentioned in this Report; (b) do not own 1 or more of the equity securities of the subject company
mentioned in the report as of the last day of the month preceding the publication of the research report; (c) do not have any material conflict of interest at the
time of publication of the Report.
The Analysts engaged in preparation of this Report:-
(a) have not received any compensation from the subject company in the past twelve months; (b) have not managed or co-managed public offering of securities for the subject
company in the past twelve months; (c)have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in
the past twelve months; (d) have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the
subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject company or third party in connection with the Report;
(f) has not served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company.
Name Qualification Designation
Sudeep Shah MMS-Finance DVP- Technical & Derivative Research
Sunny Agrawal B.E, MBA (Finance) DVP - Fundamental Research
Rajesh Gupta PGDBM (Finance), MA (Bus. Eco) AVP - Fundamental Research
Monica Chauhan C.A. Research Analyst - Equity Fundamentals
Harsh Vasa CA Research Analyst - Equity Fundamentals
Sumeet Shah B.E., CFA Research Analyst - Equity Fundamentals
Sweta Padhi MBA (Finance) Research Analyst - Equity Fundamentals
Uday Chandgothia B-Tech, MBA (Finance) Research Associate - Equity Fundamentals
Gautam Updhyaya MBA (Finance) Research Analyst - Equity Derivatives
Vinayak Gangule BE (IT) Research Analyst - Equity Technicals
Ghanshyam Gupta MBA (Finance) Research Analyst- Currency Derivative
Sagar Peswani B.Tech (ECE) Research Associate - Equity Technicals
Kalpesh Mangade B.Com MIS Analyst - Retail Research
For other Disclosures please visit: https://bit.ly/R_disclaimer02
Sudeep Shah Sunny Agrawal
DVP – Technical & Derivative Research DVP – Fundamental Research
SBI Securities 8
