Godavari Biorefineries set for lackluster Dalal Street debut

Shares of Godavari Biorefineries are set to debut on Dalal Street on Wednesday, October 29, but the ethanol producer is expected to have a lackluster listing, based on the current grey market premium. The company's standing in the unofficial market has declined following a weak response to the IPO.

Godavari Biorefineries set for lackluster Dalal Street debut

The grey market premium (GMP) for Godavari Biorefineries has experienced a significant drop due to the lukewarm interest from investors. Prior to its debut, the company was trading at a premium of ₹5 in the unofficial market, indicating a potential listing gain of only one percent for investors. The GMP was around ₹15-20 when the IPO opened for bidding. The IPO for Godavari Biorefineries was open for bidding from October 23 to October 25, offering shares within a fixed price range of ₹334-352 per share, with a lot size of 42 shares. The company raised a total of ₹554.75 crore from the IPO, which included a fresh share issue of ₹325 crore and an offer-for-sale (OFS) of up to 6,526,983 equity shares. Overall, the issue was subscribed just 1.83 times, bolstered by last-minute interest from qualified institutional buyers (QIBs), who subscribed 2.76 times their quota. Retail investors' allocation was 1.71 times subscribed, while the non-institutional investors (NIIs) portion was undersubscribed at only 90 percent during the bidding process.

Company's history

Founded in 1956, Godavari Biorefineries produces ethanol-based chemicals in India. The Mumbai-based company’s product range includes bio-based chemicals, sugar, various grades of ethanol, and power, which are utilized in industries such as food and beverages, pharmaceuticals, flavors and fragrances, energy, fuel, personal care, and cosmetics. Brokerages have mixed opinions on the IPO, with some recommending it for subscription while others advise against it. Equirus Capital and SBI Capital Markets acted as the book-running lead managers for the Godavari Biorefineries IPO, while Link Intime India served as the registrar for the issue.