Dodla Dairy IPO – Issue Details, Price Band, Review and Analysis
Hyderabad based Dodla Dairy’s IPO would open for subscription on 16th June 2021. Dodla Dairy Ltd is a leading dairy player in entire southern India region which has large product portfolio. Company generated strong revenue growth in the last 3 years and 9 months. Should you invest in Dodla Dairy IPO? In this article we would provide Dodla Dairy IPO dates, IPO Price band, market lot, reasons to invest, risk factors, IPO Price valuations and final review whether one should invest or avoid.
About Dodla Dairy Limited
Dodla Dairy Limited was incorporated in 1995 and is an integrated dairy company in entire South India. Company is engaged in the procurement, processing, distribution, and marketing of milk and other dairy products. Company processes, sells milk (including standardized, toned, and double toned milk), and produces dairy products such as curd, butter, ghee, ice cream, flavored milk etc.,
Dodla Dairy Limited competitive strengths
1) Company has large product portfolio.
2) It is a leading dairy player in the entire southern region of India.
3) Company has strong distribution network.
4) It has integrated business model with stringent quality control procedure.
5) Company with experienced board and managerial team.
Dodla Dairy IPO Dates, Price Band and Issue Details
Dodla Dairy IPO would open on Wednesday 16th June 2021 and closes on Friday 18th June 2021.
|IPO Opening Date||16-Jun-21|
|IPO Closing Date||18-Jun-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price band||Rs 421 to Rs 428 per equity share|
|Lot Size||35 Shares|
|Min Order Quantity||35 Shares|
|Listing at||BSE and NSE|
|Issue Size||Rs 520.18 Crores
i) OFS – Rs 470.18 Crores
2) Fresh issue – Rs 50 Crores
Objects of the issue
Here are the objects of the IPO issue.
1) Offer for Sale for Rs 470.18 Crores: Under OFS, selling shareholders would sell the shares and the company would not get any proceeds from this offer.
2) Fresh Issue for Rs 50 Crores:
i) To repay or prepay company’s borrowings fully or partially.
ii) To finance capital expenditure requirements.
iii) To meet general corporate purposes.
Who are the company promoters?
Dodla Sunil Reddy, Dodla Sesha Reddy, and Dodla Family trust are the company promoters.
Company Financial Performance
Here are the consolidated revenue and profit details in the last 3 years and 9 months.
|Period ending||Total Revenues (Rs in Mns)||Profits after tax
(Rs in Mns)
|9 months ending Dec-20||14,170.3||1,163.8||8.2%|
Its EPS for FY2020 is Rs 8.96 and last 3 years average EPS is Rs 9.94. For 9 months ended Dec-20, its EPS was at Rs 20.91.
Why to invest in Dodla Dairy Limited IPO?
Here are a few reasons to invest.
1) Dodla Dairy Limited is dairy company in South India which is engaged in the procurement, processing, distribution, and marketing of milk and other dairy products
2) Company generated consistent revenue growth in the last 3 years and 9 months.
Risk Factors of investing in this IPO
1) Company margins have been falling between 2018 to 2020 (3.6% to 2.3%). However, company generated abnormal profits of 8.2% for 9 months ended Dec-20. Investors need to wait and watch couple of quarters performance to check whether it is sustainable or not.
2) Company operations are dependent on the supply of large amounts of raw milk. Its inability to procure adequate amounts of raw milk from farmers and 3rd party suppliers at competitive prices can affect business and financial conditions of the company.
3) Covid-19 has an adverse effect on company business and operations. This might continue in future too which is uncertain and cannot be predicted.
4) Any contamination or deterioration of company milk products or raw materials can pose legal liability, damage its reputation and affect its business.
5) Raw milk supply is subject to seasonal factors. Company inability to accurate forecast demand for its products can affect business
6) Company processing plants and even its business is from south India region. Any adverse developments in this region can affect company business.
7) For complete internal and external risk factors, you can refer the RHP of the company
Dodla Dairy IPO Dates / Timetable / IPO Schedule
|Finalization of Allotment||23-Jun-21|
|Initiation of Refunds||24-Jun-21|
|Credit to Demat Account||25-Jun-21|
|IPO Shares Listing Date||28-Jun-21|
Dodla Dairy IPO Price Valuations
This section helps you know how the issue is priced i.e., overpriced or underpriced. Dodla Dairy IPO Issue Price band is Rs 421 to Rs 428.
1) On the upper price band of Rs 428 and EPS of Rs 14.57 for FY20, the P/E ratio works out to be 48x.
2) For the last 3 years average EPS of Rs 9.94, the P/E ratio is 43x.
3) If we annualize its 9 months ended Dec-21 EPS, the P/E ratio is 15x.
4) Means, the company asking price of Rs 428 of the upper price band in the P/E range of 15x to 48x.
5) There are listed peers like Hutson Agro Products which is trading at P/E 123x (Highest) and Parag Milk Foods at P/E 12.5x (Lowest) and the industry average is 68x.
Hence, Dodla Dairy Share Price of Rs 428 (upper price band) is fully priced.
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Should you invest in Dodla Dairy IPO?
Dodla Dairy Ltd is a leading dairy player in entire southern India region which has large product portfolio.
Company financials indicate steady revenue growth in the last 3 years and 9 months.
Company margins were on declining mode between 2018 to 2020, however it posted high margins for 9 months ended Dec-20. One need to wait and watch whether such high profits are sustainable.
Dodla Dairy IPO price is fully priced.
Considering all these positive factors, one can invest in this IPO for short term to long term perspective.
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