Godavari Biorefineries Ltd posted a net profit of ₹7,180 lakh in FY25, up from ₹6,478 lakh last year. Revenue rose 11.7% YoY to ₹1,87,055 lakh. EPS stood at ₹14.05 — and yet the stock is sulking at just ₹192. Is this undervaluation or is the market smelling something fishy in the fermentation tank?
🏢 About the Company
- Sector: Agro-chemicals, ethanol, sugar, and green chemicals
- Founded: 1939 (yes, this company is older than your dad’s dad)
- HQ: Mumbai, Maharashtra
- Core Biz: Sugar milling, power cogeneration, ethanol distillation, and biobased chemicals — all under one ESG-friendly roof
- Recent IPO: Listed in Oct 2024, ₹352 issue price. CMP? ₹192. Welcome to the Indian markets.
🧑💼 Key Managerial Personnel (KMP)
| Name | Role |
|---|---|
| Samir Somaiya | Chairman & Managing Director |
| Naresh S. Khetan | CFO |
| Swapna Gunware | Company Secretary |
✅ Auditor opinion: Unmodified, no skeletons (yet) found in the sugarcane fields.
📊 Financials (FY25 vs FY24)
| Metric | FY25 (₹ Cr) | FY24 (₹ Cr) | Change |
|---|---|---|---|
| Revenue from Operations | ₹1,870.55 | ₹1,686.66 | 🔼 +11.7% |
| Total Income | ₹1,886.91 | ₹1,701.06 | 🔼 +10.9% |
| EBITDA (est.) | ₹17,125.20 | ₹15,244.60 | 🔼 +12.3% |
| Net Profit (after tax) | ₹71.80 Cr | ₹64.78 Cr | 🔼 +10.8% |
| EPS (Basic & Diluted) | ₹14.05 | ₹15.50 | 🔻 -9.4% |
| Equity Share Capital | ₹51.17 Cr | ₹41.94 Cr | 📈 IPO-led jump |
| Other Equity | ₹730.78 Cr | ₹458.73 Cr | 📈 Doubled |
💡 Note: There’s a one-time deferred tax hit of ₹24.49 Cr in FY25 that makes the numbers look worse — a classic “it’s not us, it’s the government” situation.
💸 Forward-Looking Fair Value (FV)
Let’s run a back-of-the-napkin calculation.
- EPS (Normalised): ₹14.05 (excluding one-time deferred tax)
- Sector PE (Avg for Ethanol/Chem): ~20x
- Fair Value Estimate: ₹14.05 × 20 = ₹281
With CMP at ₹192, the stock trades at just 13.6x earnings.
🔍 Undervalued? Possibly. But let’s not jump the gun until we check the next section.
🚀 Estimated Growth & Industry Outlook
- Sugar sector tailwinds: Government backing for ethanol blending targets (E20 by 2026)
- Bio-based chemicals: Increasing relevance in global ESG-focused portfolios
- Distillery capacity: Already contributing ₹594.00 Cr in revenue
- Capex likely funded via IPO proceeds: ₹325 Cr raised, debt partly repaid, balance sheet de-leveraging underway
However…
- Price pressures in global sugar
- Inventory bloating from Q4 (though improving YoY)
- EPS dilution due to equity expansion post IPO
⛽ Growth levers exist, but execution will decide whether this becomes the next Balrampur Chini or a sweet disappointment.
🤡 EduInvesting Take
Let’s get one thing clear.
This company…
- Runs on ethanol
- Prints money from sugar
- And still looks like it’s stuck in a sideways consolidation between your ex’s attention span and SEBI’s IPO listing guidelines
From a ₹352 IPO to ₹192 CMP — that’s either a gift from the gods or the start of a value trap.
Retail bhakts are crying foul, but Godavari seems to be playing the long game:
- Raised funds ✅
- De-leveraging ✅
- Real revenue growth ✅
- EPS dilution from IPO ❌ (but temporary)
👀 Verdict: Not junk. Not a multibagger yet either. But if this turns, it’ll turn hard.
⚠️ Risks & Red Flags
- 🚨 Huge deferred tax expense this year. One-time? Maybe. But it dented net profits big time.
- 🧊 Inventory level still high — ₹739 Cr as of FY25
- 🧾 Trade receivables: ₹138 Cr — that’s a long line waiting to pay up
- 🧴 Sector risk: Overexposure to seasonal and regulated sugar/ethanol dynamics
🧾 Balance Sheet Snapshot (Standalone)
| Particulars | FY25 (₹ Cr) | FY24 (₹ Cr) |
|---|---|---|
| Total Assets | ₹1,943.81 | ₹1,987.31 |
| Total Equity | ₹772.58 | ₹494.38 |
| Total Borrowings | ₹484.57 | ₹649.06 |
| Cash + Bank Balances | ₹34.09 | ₹33.68 |
| Inventory | ₹732.61 | ₹801.55 |
| Trade Receivables | ₹129.53 | ₹181.95 |
🧯 Improving liquidity, rising equity, reducing debt. We like this direction.
🧠 Final Thoughts
💰 Godavari Biorefineries Ltd is doing all the boring, right things — reducing debt, improving earnings, and reinvesting in the business. But markets love drama, not discipline. Hence the ₹192 punishment post a ₹352 IPO.
Will FY26 be the breakout year where sugar becomes sexy again?
Only time (and ethanol margins) will tell.
Author: Prashant Marathe
Date: May 24, 2025
