Dodla Dairy Ltd IPO opens tomorrow: should you subscribe?
After a brief pause, a handful of IPOs are expected to hit the Indian stock market this monsoon. On Mon this week, Shyam Metalics IPO and a few others opened for subscription, and on Wed, KIMS Hospitals and Dodla Dairy IPOs are prepping to open for retail investors. In this article, let us evaluate Dodla Dairy IPO.
About Dodla Dairy Limited
Incorporated in 1995, Hyderabad-based Dodla Dairy Limited is India’s third-largest dairy firm in terms of daily milk procurement at 10.3 lakh litres. Further, it is the second-largest private dairy player in terms of market presence. The integrated dairy company procures, processes, distributes, markets, and sells milk and value-added dairy products. Their portfolio includes variants of milk — including standardized, toned, and double toned — butter, curd, ghee, flavoured milk, and ice cream.
The company has both a domestic and an international presence. Speaking of its domestic business, the company’s key market segments are Karnataka, Andhra Pradesh, Tamil Nadu, Telangana, and Maharashtra, where it sells its products under the brand names of “Dodla Dairy”, “Dodla”, and “KC+”. In the overseas market, it mainly operates in countries such as Uganda and Kenya under the brand names of “Dairy Top”, “Dodla Dairy”, and “Dodla+”.
Operations of Dodla Dairy Ltd
Dodla Dairy has 13 processing plants and 86 milk chilling centres in India. The combined capacity of its 13 processing and packaging plants is 17 lakh litres of raw milk on a daily basis. Additionally, the dairy company also has 2 skimmed milk powder plants with an installed capacity of 25,000 kgs per day.
Dodla Dairy processing plants process raw materials into packaged milk and also manufacture value-added dairy-based products. It then distributes and sells its consumer-friendly packaged products through a robust distribution network of 40 sales offices, 3,336 distribution agents, 449 product distributors, and 863 milk distributors across 11 states. The company has 371 ‘Dodla Retail Parlors’ through which it sells products to retail consumers.
Details of Dodla Dairy IPO
- The Rs 520-cr worth IPO opens on 16th Jun 2021 and closes on 18th Jun 2021
- It comprises a fresh issue of Rs 50 cr and an offer for sale of up to 1.09 shares or ~Rs 470 cr
- The face value of each share is Rs 10 while the IPO is priced in the range of Rs 421 to Rs 428 apiece
- The IPO can be subscribed in a lot of 35 shares; you can apply for up to 13 lots
- Dodla Dairy will be listed on both BSE and NSE and the likely date of listing is 28th Jun 2021
Book running lead managers and registrar
Axis Capital and ICICI Securities are the book running lead managers of the issue. KFintech Pvt Ltd is the registrar to the issue.
Reservation of IPO for various categories of investors
- 50% of the issue is reserved for qualified institutional buyers
- 5% is reserved for non-institutional investors
- 35% of the IPO is reserved for retail investors
Utilisation of the IPO proceeds
The objective of the IPO is not to expand its operations but to strengthen Dodla Dairy’s footprint in South India. Here’s how the company looks to use the funds raised via the IPO:
- Rs 32.26 cr would be used for full/partial repayment or prepayment of credit availed from ICICI Bank, HDFC Bank, and the Hongkong and Shanghai Banking Corporation
- Around Rs 7 cr would be used to fund incremental capital expenditure
- The rest would be used for general corporate purposes including research and development, hiring new talent, and digitisation
Promoters of Dodla Dairy
The dairy company is promoted by Dodla Sesha Reddy, Dodla Sunil Reddy, Dodla Deepa Reddy, and Dodla Family Trust. The promoters and investors selling their shares include Dodla Sunil Reddy, Dodla Deepa Reddy, and TPG Dodla Dairy Holdings.
Change in the promoter holding
Below is a chart depicting the pre- and post-issue promoter share holding
Listed and unlisted peers of Dodla Dairy Ltd
Dodla Dairy Ltd competes with the likes of Tirumala Milk Products, Creamline Dairy Products, Parag Milk Foods, Heritage Foods, and Hatsun Agro Products of which the last 3 are listed. As of 31st Mar 2020, Hatsun Agro Products clocked a net profit of Rs 112.27 cr, Heritage Foods of Rs 169.4 cr, and Parag Milk Foods of Rs 93.69 cr. In comparison, Dodla Dairy declared a net profit of Rs 49.87 cr.
Continue to read the other details of Dodla Dairy Ltd and its IPO including financials, peer comparison, strengths, risks, and prospects here.
