The initial public offering (IPO) of Godavari Biorefineries has captured the attention of investors and analysts alike as it opens for subscription today. Here’s a summary of Godavari Biorefineries IPO recommendations by major brokerage houses. The company aims to raise INR 554.75 crore through this offering, and several brokerage houses have provided their recommendations based on their analyses of the company’s financial health and market potential. Read on for more.
Godavari Biorefineries IPO Recommendations
BP Wealth – Subscribe
BP Wealth has recommended that investors with subscribing tolerance consider applying for the Godavari Biorefineries IPO. “The issue is valued at a P/E of 120.1x on the upper
price band based on FY24 earnings. Though the issue looks rich in terms of valuation, we
believe that the company’s strong business performance along with industry tailwinds provide an opportunity from a medium to long term perspective. Therefore, we recommend a
SUBSCRIBE rating for the issue”.
Canara Bank Securities – Subscribe
Analysts at Canara Bank Securities outlined several positive factors in its report and stated that the company has more to offer beyond ethanol. “GBL (Godavari Biorefineries Limited) became India’s first manufacturer of bio-based EVE (ethylene vinyl ether), a crucial element in specialty chemicals, and plans to produce second-generation ethanol. GBL’s product mix extends beyond ethanol, providing exposure to multiple industries like food, personal care, and industrial chemicals. GBL caters to prestigious clients, including Hershey India, Hindustan Coca-Cola Beverages, LANXESS India, and several oil marketing companies,” added the report putting a subscribe rating on the upcoming IPO.
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Ventura Securities – Subscribe
Ventura Securities has assigned a “subscribe” rating to the Godavari Biorefineries IPO. “Godavari Biorefineries operates state-of-the-art manufacturing facilities in Karnataka and Maharashtra. These facilities are equipped with advanced technology to ensure high efficiency and sustainable production practices. The company’s commitment to quality, innovation, and sustainability has made it a trusted name in the bio-based chemical industry, both domestically and internationally,” noted its research note.
GEPL Capital – Subscribe
Analysts at GEPL Capital added further to the positive Godavari Biorefineries IPO recommendations. Its research note outlined experienced promoter, integrated bio-refinery, diversified product portfolio and well-established relationship with a diversified marquee customer base as prominent factors behind its Subscribe rating.
Samco Securities – Avoid
Samco Securities has issued a clear “Avoid” recommendation for the Godavari Biorefineries IPO.
- The listed peers namely Alkyl Amines, Dwarikesh Sugar, & Dhampur Sugar Mills with similar levels of revenue from operations recorded a decline in sales growth in the FY24 for FY23.
- But, the RoCE of Godavari stood at 9.53% being the least amongst its peers with Alkyl amines – 16.32%, Dwarikesh Sugar – 12.9%, Dhampur Sugar Mills – 11.37%.
- Additionally, the asset turns of the company stood at 1.98x whereas its peers such Alkyl amines, Dwarikesh Sugar, & Dhampur Sugar Mills are at 1.32x, 2.93x, and 2.3x respectively.
- Although the company reported positive EPS in FY24, it turned negative in Q1FY25. Therefore, comparing the company based on earnings valuation may not be appropriate.
- “However, considering other factors such as growth potential and financials, the IPO appears overvalued, and it is recommended to avoid investing in it”.
Marwadi Financial – Avoid
While acknowledging the company’s competitive strength in Ethanol-based chemicals, diversified product portfolio and well-developed in-house research and development capabilities, the research house outlined a few risks including dependance on a few suppliers for supply of a significant portion of raw materials and high dependence on few customers. “We assign “Avoid” rating to this IPO as valuations are expensive and not in favor of investors,” noted its research report.
Godavari Biorefineries IPO Recommendations – Bottomline
While Godavari Biorefineries IPO recommendations are largely positive, some have highlighted the risk factors. Like all other public offers, it is important to note that Godavari Biorefineries IPO analyst views are a reflection of the company’s capabilities as well as current market conditions.
