Mumbai, June 28, 2021: Shares of Dodla Dairy Ltd made a strong debut on the exchanges on Monday, listing at ₹550, a 28.5% premium from its issue price of ₹428 apiece. Dodla Dairy’s ₹520 crore initial share-sale was subscribed 45.62 times at a price band of ₹421-428 apiece during the share sale between 16 June and 18 June.
Dodla Dairy is an integrated dairy company based in southern India primarily deriving revenue from the sale of milk & dairy-based value-added products (VAPs). The company is third highest in terms of milk procurement with average purchase of 1.03 million litre of raw milk per day among private dairy players with a significant presence in southern India according to the reports published in livemint.com.
Apart from a presence in the south, it has overseas operations based in Uganda and Kenya. The company processes and sells milk and produces dairy-based value-added products like curd, ultra-high temperature processed milk, ghee, butter, flavoured milk and ice cream among others. It also manufactures and sells cattle feed to farmers through its procurement network.
Some of the key risks and concerns are inability to procure adequate milk at competitive prices, supply & transportation disruptions, high competition from large dairy cooperatives and inability to expand & change as per consumer preferences, said Sanjay Manyal, research analyst, ICICI Securities.
“The IPO is valued at 16.5 times of FY21 earnings, which looks to be reasonably valued compared to its peers who trade at a significant premium compared to Dodla Dairy. Considering strong operating cash flow (OCF) yield and consumer-centric business, which usually commands higher multiple,” Vikas Jain, senior research analyst, Reliance Securities, said.
Ahead of the issue, Anand Rathi said Dodla Dairy Ltd said that the issue is available at 4.8 times price to book value and 47.8 times its FY20 earnings at the upper end of the price band.
“India being the largest milk producer and consumer in the world, we believe in the long-term prospects of the domestic dairy industry. It has immense potential for growth for Company. We believe Dodla Dairy is available at fair valuations considering the opportunity size lying ahead of the company in the dairy industry that is constantly in the process of evolution from raw milk to focus towards value-added milk and milk products,” the brokerage firm had said.
