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Dodla dairy’s IPO oversubscribed by 45.62 times on day 3

The public issue of Dodla Dairy has seen a subscription of 45.62 times as the offer received bids for 38.80 crore equity shares against IPO size of 85.07 lakh equity shares on June 18, the final day of bidding.

The qualified institutional buyers have put in bids for 84.88 times of their reserved portion and that of non-institutional investors 73.26 times so far.

A part set aside for retail investors has been subscribed 11.34 times. They are allowed to invest up to Rs 2 lakh in IPO, so they can apply for shares worth a minimum of Rs 14,980 and a maximum of Rs 1,94,740 worth of Dodla Dairy shares.

South-based integrated dairy company aims to raise Rs 520.17 crore through its public issue that comprises a fresh issue of Rs 50 crore and an offer for sale of up to 1,09,85,444 equity shares by the existing selling shareholders including TPG Dodla Dairy Holdings Pte Ltd.

The net funds raised from fresh issue will be utilised for repaying of borrowings (Rs 32.26 crore).

The company has already garnered Rs 156 crore from anchor investors on June 15, at a higher end of price band of Rs 421-428 per equity share.

Dodla Dairy reported consistent growth over the last three financial years both in terms of financial and operational metrics, with revenue rising at a CAGR of 15.98 percent and EBITDA (earnings before interest, tax, depreciation and amortisation) at a CAGR of 11.81 percent during FY18-FY20, by selling milk and dairy-based value-added products (VAPs) in the branded consumer market.

It has operations in India across the five states – Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Maharashtra, while overseas operations are based in Uganda and Kenya.

“In terms of valuations, the post-issue 9MFY21 annualised PE works out to 16.4x (at the upper end of the issue price band), which is low compared to Parag Milk Foods (trading at 32.7x). Further, Dodla Dairy has shown improvement in operating margin with efficient working capital cycle,” said Angel Broking.

Going forward, the brokerage believes that Dodla Dairy would perform better on the back of increase in value added product mix. Thus, it recommended a subscribe rating on the issue.

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