At a glance:
Godavari Biorefineries Ltd (GBL), a sugar-ethanol-chemicals-energy conglomerate with biofuel dreams, has spent five years oscillating between profitability and facepalms. FY25 ended in the red again, but product diversification (like India’s only Ethyl Vinyl Ether plant) and green fuel tailwinds give it just enough hope. Still, the sugar isn’t sweet — yet.
1. 🧾 About the Company
Incorporated in 1939, Godavari Biorefineries Ltd is part of the Somaiya Group. It runs one of India’s few fully integrated biorefineries — from sugar to ethanol to biochemicals to renewable power.
🧪 Key highlights:
- Largest MPO manufacturer in India
- Only Indian maker of bio-based Ethyl Vinyl Ether (EVE)
- One of two global makers of natural 1,3 Butylene Glycol (BG)
- Consumer brand “Jivana” sells sugar, salt, turmeric in four states
2. 👨💼 Key Managerial Personnel (KMP)
- Sambhaji Kadam – Managing Director
- Sameer Somaiya – Promoter Group, key strategist and face of innovation
- Sanjay Kuber – CFO
The team is leaning heavily on capex and ethanol expansion to offset commodity volatility.
3. 📊 Financials: FY21 to FY25
| ₹ in Crores | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue | 1,538 | 1,702 | 2,015 | 1,687 | 1,870 |
| Operating Profit | 158 | 135 | 147 | 134 | 104 |
| OPM (%) | 10% | 8% | 7% | 8% | 6% |
| Net Profit | 27 | 19 | 20 | 12 | -23 |
| EPS (₹) | 6.47 | 4.64 | 4.68 | 2.93 | -4.57 |
| ROCE (%) | 12% | 9% | 9% | 7% | 6% |
| ROE (%) | 5% | 3% | 3% | 1% | -4% |
❗ FY25 was a flop at the bottom line — due to weak chemical prices and inventory losses.
4. 🧪 Segment Snapshot (Quarterly)
| Quarter | Revenue (₹ Cr) | OPM % | Net Profit (₹ Cr) |
|---|---|---|---|
| Sep ‘23 | 239 | -13% | -65 |
| Dec ‘23 | 398 | 11% | 38 |
| Mar ‘24 | 615 | 18% | 65 |
| Jun ‘24 | 523 | -2% | -26 |
| Sep ‘24 | 321 | -10% | -75 |
| Dec ‘24 | 447 | 8% | 6 |
| Mar ‘25 | 580 | 19% | 72 |
🧠 Fun Fact: This company has more mood swings than a B-school placement cell. One quarter it’s printing profits, the next it’s back in the ICU.
5. 💰 Balance Sheet Analysis (FY21–FY25)
| Item | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Net Worth (₹ Cr) | 454 | 473 | 490 | 501 | 782 |
| Borrowings (₹ Cr) | 569 | 637 | 736 | 655 | 490 |
| Total Assets (₹ Cr) | 1,442 | 1,733 | 1,744 | 1,992 | 1,955 |
| Fixed Assets (₹ Cr) | 708 | 667 | 866 | 850 | 878 |
| CWIP (Capex in Progress) | 9 | 50 | 17 | 29 | 22 |
| Cash Flow from Ops (₹ Cr) | 130 | 45 | 197 | 186 | 6 |
📉 Cash Crash Alert: From ₹186 Cr operating cash in FY24 to just ₹6 Cr in FY25 — a worrying sign.
6. 🔍 What’s Driving the Business?
🏭 Product Categories:
- Ethanol & Biofuels: Margin sweet spot, major government push
- Bio-Chemicals: High value, but volatile due to crude-linked raw material prices
- Sugar & Power: Steady but low-margin, cyclical
- Retail (Jivana): Small but growing brand
🚀 Strategic Growth Plans:
- 200 KLPD grain-based ethanol plant expected by Q4 FY26
- Targeting 3x EBITDA growth by FY29
- Realignment towards value-added bio-chemicals
7. 🧮 Fair Value (FV) Estimate (EduInvesting Range)
Assumptions:
- FY26 EBITDA: ₹300 Cr (3x FY25)
- EV/EBITDA: 7x (conservative for small-cap bio-industrial)
- Implied EV: ₹2,100 Cr
- Less Net Debt (est.): ₹250 Cr
- Equity Value: ₹1,850 Cr
- Shares Outstanding: 6.5 Cr
➡️ Fair Value Range: ₹260–₹290
CMP: ₹273 (As of June 12, 2025)
⚠️ Valuation is fair, not cheap — priced for a FY26 revival that hasn’t happened yet.
8. 📉 Risks & Red Flags
- 🧯 FY25 Net Loss of ₹23 Cr
- 💵 Operating Cash Flow dried up despite higher revenue
- 🏭 Inventory Days still abnormally high at 195
- 🧾 IPO funds deviation: ₹1.40 Cr excess used (disclosed, within SEBI limits)
- 🐢 5-year sales CAGR is just 5% — low for a ‘growth’ company
9. 📈 Why It Stands Out
✅ Only Indian player with Ethyl Vinyl Ether capability
✅ Deep vertical integration from sugar to high-value bio-chemicals
✅ Ethanol policy tailwinds could boost long-term earnings
✅ Targeting export markets for bio-based chemicals (e.g. USA, EU)
10. 🧠 EduInvesting Verdict
Godavari Biorefineries is like a hybrid between a PSU and a startup — stable in core (sugar), wild in vision (bio-chemicals), but chaotic in execution.
At ₹273, it isn’t overpriced, but it’s not your multibagger sugar rush either. Watch for:
- Smooth commissioning of the grain ethanol plant
- Stabilized quarterly cash flow
- Actual 3x EBITDA delivery by FY29
Until then, this stock is a bet on biotech ambitions… and management discipline.
Tags: Godavari Biorefineries, Ethanol Stocks India, Bio-based Chemicals, FY25 Results, Sugar Stocks, Green Fuel India, Biotech Smallcap, Renewable Energy India, EduInvesting
Author: Prashant Marathe
Date: 12 June 2025
