Dodla Dairy IPO

IPO Details:

Price Band: 421-428

Cutoff Price: 428

About Company:

Dodla Dairy is an integrated dairy company based in south India primarily deriving all of our revenue for Fiscal 2020 and for the nine months' period ended December 31, 2020 from the sale of milk and dairy based VAPs in the branded consumer market. Amongst private dairy players with a significant presence in the southern region of India, it is 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. Their operations in India are primarily across the five Indian states of Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Maharashtra. Their overseas operations are based in Uganda and Kenya. Indian operations are undertaken under the brands “Dodla Dairy”, “Dodla” and “KC+” and overseas operations are undertaken under our brands “Dodla Dairy”, “Dairy Top” and “Dodla+”. Company process and sell retail milk (full cream, standardised, toned and double toned) and produce dairy based value-added products (“VAPs”) such as curd, Ultra-High Temperature processed (“UHT”) milk, ghee, butter, flavoured milk and ice cream amongst others. Company also manufactures and sells cattle feed to farmers through procurement network.

Competitive Strengths:

1. Consumer focused dairy company with a diverse range of products under the “Dodla Dairy” and “Dodla” brands.

2. Integrated business model with well-defined procurement, processing, and distribution capabilities.

3. Focused engagement and long-term relationship with dairy farmers.

4. Stringent quality control procedures.

5. Financial Growth and operational efficiencies.

Strategies:

1. Enhance brand visibility and expand the reach of products.

2. Further strengthen procurement and processing operations.

3. Expand operations domestically and internationally by way of organic and inorganic growth.

4. Increase revenues from dairy based VAPs.

5. Research and development in dairy farming and allied activities.

Financial Performance:

Company revenue, net profit and EPS are positive and stable. Company net profit and EPS for last three quarters has spiked up may be because of the IPO. During this revenue didn't show any growth. With normalized EPS for current financial year, PE of the Dodla Dairy is 15.4.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Repayment/Pre-Payment of the borrowings

2. Funding Capital Expenditure

3. General corporate purposes

Competitors Comparison:

Dodla Dairy IPO seems to be undervalued if compared to its competitor: Hatsun Agro

Grey Market Premium:

Our view: GMP of the stock is decent and also the stock is undervalued. We can expect this IPO to list at premium and hence I would be applying for this IPO.

Do visit this blog and the link after 6pm to get updated details on grey market premium and subscription details.

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