TruAlt Bioenergy IPO subscribed 81% on Day 2: Should you apply?

TruAlt Bioenergy IPO Day 2

The initial public offering of TruAlt Bioenergy has been subscribed 81 percent on its second day of public bidding (September 26). The ethanol-producer aims to raise Rs 839 crore through the IPO.

The IPO received bids for more than 1 crore shares, as against the offer size of over 1.23 crore shares, according to data on NSE. Retail investors have booked 79 percent of their reserved portion, while Non Institutional Investors (NII) subscribed to 80 percent of the portion kept for them. The portion kept for Qualified Institutional Buyers (QIBs) portion has been subscribed 87 percent.

TruAlt Bioenergy IPO GMP:

Ahead of listing, the unlisted shares of the company were trading with 16 percent grey market premium (GMP) over the IPO price, according to data on Investorgain. This is higher than the 11-12 percent GMP quoted by the site earlier this week.

According to IPO Watch, the unlisted shares of the company were trading with more than 16 percent GMP over the IPO price.

TruAlt Bioenergy IPO: Key things to know

The maiden public issue of TruAlt Bioenergy comprises a fresh issue of shares worth Rs 750 crore and an offer for sale (OFS) of 18 lakh shares worth Rs 89.28 crore by the existing promoters. The price band has been set at Rs 472-496 per share for the IPO which will remain open between September 25 and September 29.

Investors can bid for a minimum of 30 shares, requiring an investment of Rs 14,880 at the upper price band, and in multiples thereafter. The share allotments are likely to be finalized by September 30, and the shares are scheduled to be listed on stock exchanges on October 3.

DAM Capital Advisors and SBI Capital Markets are the book running lead managers to the issue. Not more than 50 percent of the offer has been allocated to qualified institutional buyers (QIB), and while 15 percent and 35 percent of the offer has been reserved assigned to non-institutional bidders (NII) and retail individual bidders respectively.

How will issue proceeds be used?

The Bangalore-based biofuels producer with installed ethanol production capacity of 2,000 kilo litres per day, plans to spend Rs 150.68 crore from the fresh issue proceeds for setting up multi-feed stock operations.

Further, Rs 425 crore will be used for working capital requirements. The remaining fresh issue funds will be used for general corporate purposes.

Trualt Bioenergy IPO: Anchor Book

A day before the IPO opened for public bidding, Trualt Bioenergy raised Rs 252 crore from anchor investors. Tata Mutual Fund (MF), HDFC MF, Bandhan MF, SBI General Insurance Company, Societe Generale, and Citigroup Global Markets Mauritius were among the anchor investors who invested in the company.

Trualt Bioenergy IPO: Should you subscribe?

The IPO will peg the company's market cap near Rs 4,200–4,300 crore at the upper end, said Harshal Dasani, Business Head at INVAsset PMS. "Strengths include its strong ethanol capacity, government policy support under India’s ethanol-blending program, improving profitability, and robust ROE. Weaknesses lie in its dependence on government-regulated pricing, sensitivity to cane and molasses availability, working-capital intensity, and relatively high leverage despite improvements," he said.

"At the upper price band, the IPO is valued at around 23–24x FY25 earnings and 2.2x sales, fair when compared with specialty processors but richer than commodity sugar peers. Near-term listing gains will hinge on subscription traction and sector sentiment, but long-term investors may find comfort in TruAlt's scale, policy tailwinds, and steady deleveraging. Sustaining margins above 16 percent and reducing leverage further will be key to re-rating," he added.

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