Trualt Bioenergy IPO: The good and the bad

Summary: Trualt Bioenergy, one of India’s biggest biofuel producers, is going public. Here, we analyse the company’s strengths, weaknesses and past track record to help you decide whether the issue is worth subscribing to.

The Trualt Bioenergy IPO (initial public offering) will open for subscription on September 25, 2025 and close on September 29, 2025. The biofuel producer aims to raise Rs 750 crore through a fresh issue and over Rs 89 crore via an offer for sale (OFS).

Let us break down the company’s business, financials, strengths, risks and valuation to help you make an informed investing decision.

What the company does

Trualt Bioenergy is among India’s largest biofuel producers, with a strong focus on ethanol. It holds the distinction of being the country’s biggest ethanol producer, with an installed capacity of 2,000 KLPD (kilo litres per day), with 1,800 KLPD operational as of March 2025. 

The company commands a 3.6 per cent share of India’s ethanol production capacity. Its operations are anchored in Karnataka, where it runs five distillery units, four of which produce ethanol using molasses and syrup-based feedstocks.

Track record and valuation

A quick glance at the numbers demonstrates Trualt Bioenergy’s consistent track record. Between FY23 and FY25, the company’s revenue surged at an annual growth rate of 58 per cent. Net income (profit after tax) too saw a triple-digit growth, climbing around 103 per cent during the same period. 

Such strong financials can primarily be attributed to the fact that Trualt Bioenergy is currently one of India’s leading ethanol producers and boasts a sizable production capacity.

At the upper end of the price band (Rs 496), the stock is expected to be valued at nearly 29 times its FY25 earnings and 2.8 times its book value. By contrast, Trualt Bioenergy’s peers trade at a median P/E of around 29 times and an average P/B of 2.5 times.

The good

Here are some of the positives of Trualt Bioenergy.

#1 Largest ethanol producer in the country

Trualt Bioenergy is India’s largest ethanol producer by installed capacity, at 2,000 KLPD, with 1,800 KLPD operational as of March 2025. Production touched 1.82 lakh kilolitres in FY25, up from 1.41 lakh kilolitres in FY24. Despite modest utilisation levels, the company’s ethanol sales have grown steadily, with revenue rising from Rs 762 crore in FY23 to Rs 1,908 crore in FY25.

#2 Ease of access to raw materials

The company benefits from assured access to raw materials through its promoter group, which has a cane crushing capacity of 79,000 TCD (tonnes of cane per day). In FY25, the company consumed 3.75 lakh MT (metric tonnes) of sugar syrup or juice and 3.61 lakh MT of molasses for its ethanol operations. Exclusive supply arrangements with Nirani Sugars and group entities ensure stability, while the company retains flexibility to buy from the open market when prices are favourable. This reduces external dependency, strengthens cost efficiency and provides a competitive edge to Trualt Bioenergy.

The bad

Despite its strengths, Trualt Bioenergy has some downsides.

#1 High dependency on ethanol sales

Trualt Bioenergy’s fortunes are closely tied to ethanol, making it vulnerable to shifts in demand, pricing, regulation and competition. In FY25, ethanol sales contributed nearly 80 per cent to its revenue from operations. Thus, any decline in sales volumes or realisations could weigh on its financials. While ethanol has wide-ranging applications, from fuel blending and industrial solvents to personal care and disinfectants, slowdowns in these industries or the availability of cheaper substitutes could dent demand, in turn, impacting Trualt Bioenergy’s financials. 

#2 Geographical concentration

All of Trualt Bioenergy’s units are concentrated in Karnataka’s Bagalkot district, a location that offers proximity to raw material. Any disruption, be it drought, poor monsoons, natural calamities or socio-political disturbances, could hit production and sales. 

#3 Handful of clients generate a large part of the company’s revenue

The company relies heavily on a few large buyers, with the top 10 customers accounting for almost 99.8 per cent of its core revenue for the financial year ended March 2025. A loss of any of these customers or a reduction in their offtake could significantly hamper the company’s operations and cash flows.

Where will the IPO proceeds go?

Of the fresh issue size of Rs 750 crore, Trualt Bioenergy plans to utilise nearly Rs 151 crore for setting up a new ethanol manufacturing plant, while around Rs 425 crore will be allocated to fulfil its working capital requirements. The remaining funds will be used for general corporate purposes.

So, should you apply to the Trualt Bioenergy IPO?

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