TruAlert Bio Energy IPO has generated significant buzz among investors who are looking for opportunities in India’s fast-growing renewable energy sector. As one of the leading players in the biofuel space, TruAlt Bio Energy aims to leverage government policies promoting green energy and rising demand for sustainable alternatives. But the key question remains — should investors apply for the TruAlt Bio Energy IPO, or wait on the sidelines?
“TruAlt Bioenergy IPO — Is This a Buy, Hold, or Skip?”
TruAlt Bio Energy (TruAlt), India’s leading ethanol producer, will raise ₹750 crore in primary capital from its IPO, which closes on Monday. A major portion of this amount will go towards working capital (₹422 crore), while ₹172 crore will be used to convert its ethanol unit-4 (currently based on molasses and sugar extract) into a dual-feed plant, and ₹156 crore will be used for general corporate purposes. The promoters will sell stake worth ₹89 crore in the IPO, reducing their stake by 17.6 percent to 70.6 percent.
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Investors with a long-term investment horizon of five years and a high risk appetite may consider investing in this IPO. At the upper end of the price band of ₹496, the issue is valued at 24 times FY25 earnings on a pre-fall basis, which is at a 20 percent discount compared to peers like Triveni Engineering and Praj Industries. However, post-issue, valuations will remain in line with peers. However, it is worth noting that TruAlert currently has much higher operating margins and return ratios than peers. Furthermore, the company has several interesting initiatives underway, such as expanding its compressed biogas (CBG) business.
TruAlert has the largest ethanol production capacity in the country, currently at 2,000 KLPD, spread across five manufacturing units located in Karnataka. In 2021, the promoters formed TruAlt and over the past four years have consolidated all manufacturing units that the promoters previously owned in other entities into this entity.
TruAlert has reported strong revenue and EBITDA growth, which increased by 56% and 64%, respectively, in FY2025, leading to an EBITDA margin expansion of 0.84 percentage points to 16.2%. Operating efficiencies have helped achieve this despite a slight increase in raw material costs in FY2025.
We believe TruAlert is a good diversification option for high-risk investors for three reasons.
First, TruAlt, which until recently relied solely on sugarcane juice and molasses for its raw material, has now converted three of its plants to dual-feed plants. For example, over the past two years, the FRP (Fair and Remunerative Price, a government-mandated price) for sugarcane has increased by 13 percent, while sugar-based ethanol prices have remained unchanged. This has impacted the margins of sugar-based ethanol producers. Now, with the completion of the conversion work at its Unit 4, the company’s total dual-feed, fungible capacity will increase to 1,300 KLPD, representing approximately 65 percent of its total installed capacity.
This will help the company in two ways: The operating cycle at dual-feed plants, which was 210-250 days due to seasonality in the sugarcane crop and the unavailability of molasses after the crushing season, could extend beyond 330 days. The company will also have greater flexibility to select raw materials based on their viability and availability, which will not only help recover fixed costs but also improve operating margins. Sugarcane-based ethanol players have traditionally faced challenges with significant margin variability, as input price increases have been higher than final product (ethanol) price increases, at least to the extent of supply to state oil marketing companies for blending with petrol. However, utilization in the ethanol segment has remained low at 45 percent and is expected to increase further.
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