Dodla Dairy IPO opens on Wednesday: Here’s everything you need to know

Dodla Dairy IPO: The Rs 520 crore initial public offering (IPO) of Hyderabad-based Dodla Dairy will be opening on Wednesday, June 16, 2021. It has a price band of Rs 421-428 per share.

Dodla Dairy IPO: The initial public offering (IPO) of Dodla Dairy will open for subscription on Wednesday, June 16, 2021, at a price band of Rs 421-428 per share. The offer will be available for subscription till Friday, June 18, 2021.

The IPO comprises a fresh issue of up to Rs 50 crore and an offer for sale (OFS) of up to 1,09,85,444 equity shares by promoters and investors. The OFS consists of 92 lakh equity shares by investor TPG Dodla Dairy Holdings, and 4,16,604 equity shares by Dodla Sunil Reddy, 10,41,509 equity shares by Dodla Family Trust, and 3,27,331 equity shares by Dodla Deepa Reddy.

The Hyderabad-based company is into the integrated dairy segment. It earns its revenue through the sale of milk and other dairy-based value-added products (VAPs) in the market.

“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 said in their IPO note.

The company’s integrated business model in India consists of procurement, processing, distribution and marketing operations. Its procurement operations are spread across the states of Andhra Pradesh, Telangana, Tamil Nadu, Karnataka and Maharashtra. Processing operations consist of processing the collected raw milk into packaged milk and manufacturing other dairy-based VAPs by 13 processing plants with an aggregate installed capacity of 1.70 MLPD.

Dodla Dairy also has an overseas presence in African countries including Uganda and Kenya.

Investors who wish to subscribe to Dodla Dairy IPO can bid in a lot of 35 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,980 to get a single lot of Dodla Dairy. The shares will be listed on both BSE as well as the National Stock Exchange (NSE).

The applicants also must note that the cut-off time for UPI mandate confirmation is Monday, June 21, 2021, upto 12:00 pm. If they fail to do so then their application may not be considered.

ICICI Securities and Axis Capital are the book-running lead managers to the IPO while KFin Technologies is the registrar of the issue.

The research teams at Reliance Securities and Ventura Securities in their respective notes have recommended “Subscribe” to the offer while those at HDFC Securities haven’t given any rating to the IPO.

Reliance Securities in its IPO note said, “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, we recommend SUBSCRIBE to the IPO from the long-term perspective.”

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