The Rs 555-crore initial share sale of Godavari Biorefineries continued to see muted response from investors even on the second day of bidding, October 24, possibly following subdued equity market conditions. The issue has seen 54 percent subscription, with investors buying 60.92 lakh equity shares against the offer size of 1.12 crore shares.
Read More: Explained: Why Hindalco shares plunged over 7% in early trade today
The ethanol-based chemicals maker targets to raise Rs 325 crore via fresh issue component and the remaining funds of Rs 229.75 crore through offer-for-sale (OFS) of 65.26 lakh shares. The price band for the issue is Rs 334-352 per share.
Mandala Capital AG, the only investor in the company, will be exiting the company by selling its entire shareholding of 49.26 lakh shares in the offer-for-sale, while the remaining 16 lakh shares will be offloaded by promoters.
Read More: Hindalco Shares Tank 7% Post Constellium’s Earnings Report; What Should Investors Do?
Retail investors bought 0.96 times the allotted quota, while non-institutional investors subscribed for 26 percent shares of the reserved portion set aside for them. Qualified institutional buyers bid for 8,526 equity shares so far, against the reserved portion of 31.45 lakh shares.
Godavari Biorefineries, one of largest producers of ethanol in India, intends to utilise the maximum money of Rs 240 crore out of the fresh issue proceeds for repaying its debt. The remaining funds will be used for general corporate purposes.
The company produces bio-based chemicals, sugar, different grades of ethanol and power. It supplies these products to several industries such as food, beverages, pharmaceuticals, flavours & fragrances, power, fuel, personal care and cosmetics.
Read More: RIL bonus share issue: Check last date for eligibility, analyst views & more
It competes with several listed peers like Alkyl Amines Chemicals, Jubilant Ingrevia, Laxmi Organic Industries, EID Parry (India), Triveni Engineering and Industries, Balrampur Chini Mills, Dalmia Bharat Sugar & Industries, Dhampur Sugar Mills, and Dwarikesh Sugar Industries.
According to the market observers, Godavari IPO shares are not trading at any premium in the grey market, which is an unofficial market wherein IPO shares can be bought and sold till the listing.
The issue will close for subscription on October 25.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
