Dodla Dairy IPO : Should you subscribe

Dodla Dairy opens for IPO

Dodla Dairy IPO is set to open from 16th June. Dodla Dairy Limited is a public limited company having its registered and corporate office at Hyderabad. The company was incorporated in the year 1995 and production commenced in 1997. 

Details of IPO

Size of IPO : ₹520 crores

Subscription dates : 16 June 2021 to 18 June 2021

Price Band : ₹421-₹428 per share

Lot Size : 35 shares

Value of 1 lot : ₹14,980 at the upper price range

Maximum lots per person : A retail investor can apply for 13 lots. This would cost ₹194,740.

The net proceeds of a fresh issue will be utilized for repaying of certain borrowings (Rs 32.26 crore) availed by the company from ICICI Bank, Hongkong and Shanghai Banking Corporation (HSBC), and HDFC Bank; funding capital expenditure requirements (Rs 7.15 crore); and general corporate purposes.

What do the experts say about Dodla Dairy IPO?

“Amongst private dairy players with a significant presence in the southern region of India, it is are the third highest in terms of milk procurement per day with an average procurement of 1.03 million litres of raw milk per day (MLPD) as of March 31, 2021 and second highest in terms of market presence across all of India amongst private dairy players with a significant presence in the southern region of India,” – HDFC Securities Retail Research Desk

“The IPO is valued at 16.5x of FY21 earnings, which looks to be reasonably valued. While its close peer Heritage Food trades at par with DDL, Hatsun Agro trades at 81x of FY21 earnings, a significant premium compared to DDL. Relatively stable performance compared to peers, consistent cash generation and robust return ratio (24 per cent RoE) enabled Hatsun Agro to command such premium valuation. Going forward, sustainability of recent improvement in operating performance will be the key for DDL’s valuation rerating in the medium-term. Considering strong OCF yield and consumer-centric business, which usually commands higher multiple” – Reliance Securities

Verdict

Several analysts and research houses have given a SUBSCRIBE rating to this IPO. The IPO is believed to have capabilities to create wealth in the long term.

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