TruAlt Bioenergy IPO opens with 16% GMP: Should you subscribe?

The initial public offering (IPO) of biofuels producer TruAlt Bioenergy Ltd. will open for subscription on Thursday, September 25. The ethanol-producer plans to garner ₹839.28 crore through this IPO.

The maiden public issue of the company will remain open for public bidding till September 29.

SBI Securities said in its note that TruAlt Bioenergy is the largest Ethanol producer in India in terms of installed capacity (2,000 KLPD). Going ahead, the company intends to convert 1,300 KLPD of existing capacity from mono feed to dual feed capacity allowing it to use grain as well as sugar syrup, sugarcane juice and molassesfor producing ethanol.

TruAlt Bioenergy will also focus on expanding its CBG capabilities and venturing into sustainable aviation fuel supply. The company has reported strong revenue, EBITDA, and PAT CAGR of 58%, 72%, and 103%, respectively, between FY22-25.

At the upper price band, the company is valued at FY25 PE multiple of 29.0x based on post issue capital.

TruAlt Bioenergy IPO: Anchor book

TruAlt Bioenergy raised ₹252 crore from anchor investors, just a day before its initial share-sale opening for public subscription.

Tata Mutual Fund (MF), HDFC MF, Bandhan MF, SBI General Insurance Company, Societe Generale, and Citigroup Global Markets Mauritius featured among the anchor investors.

TruAlt Bioenergy IPO: Price band

The company is selling its shares in a fixed price band of ₹472-496. The minimum lot size for an application is 30 shares and in multiples thereafter.

TruAlt Bioenergy IPO: GMP today

In the unlisted market, shares of the company are trading with a grey market premium (GMP) of 16% over the issue price.

TruAlt Bioenergy IPO: Structure

TruAlt's IPO is a combination of a fresh issue of shares worth ₹750 crore and offer-for-sale (OFS) of 18 lakh shares valued at ₹89.28 crore at the upper end, by promoters. This aggregates the total issue size to ₹839.38 crore.

In terms of issue allocation, about 50% of the IPO is reserved for qualified institutional buyers (QIBs), 35% for retail investors, and the remaining 15% for non-institutional investors.

TruAlt Bioenergy IPO: Objective

Funds raised through the fresh issuance will be earmarked for setting up multi-feed stock operations, payment of debt and general corporate purposes.

Company overview

Bengaluru-based TruAlt Bioenergy is among the leading biofuels producers and is primarily in the production of ethanol. The company is diversifying into new areas like second-generation (2G) ethanol, utilising surplus bagasse — a byproduct of sugar production — as a raw material.

TruAlt's business performance is heavily influenced by the price and availability of raw materials like sugar syrup and molasses. To reduce reliance on these seasonal resources, the company plans to shift its focus towards producing grain-based ethanol.

This strategic move is expected to help control material costs, optimise revenue, and maintain consistent ethanol production.

Book running lead managers

DAM Capital Advisors and SBI Capital Markets are the book-running lead managers of the public issue, while Bigshare Services is the registrar.

The allotment for the Trualt Bioenergy IPO is expected to be finalised on September 30, and the company's shares will be listing on BSE and NSE with a tentative listing date fixed as October 3.