Dodla Dairy’s Rs 520-crore IPO will open for subscription on Wednesday, 16 June, in the cost band of Rs 421-428 per share. The problem will close on June 18. The problem comprises fresh problem of equity shares worth Rs 50 crore and an supply for sale (OFS) of up to 1.09 crore equity shares of face worth Rs 10 every single. In the grey market place on Tuesday, Dodla Dairy shares had been quoting a premium of Rs 130-135 a share more than the IPO cost. The shares had been seen trading at Rs 563, up 31.54 per cent in the key market place. The study teams at Angel Broking and Ventura Securities in their respective notes have advisable “Subscribe” to the supply although these at HDFC Securities and JST Investments haven’t offered any rating to the IPO.
Dodla Dairy, an integrated dairy corporation based in south India, earns its income by means of the sale of milk and dairy-based worth added solutions (VAPs) in the branded customer market place. The corporation sells fresh milk, ghee, butter, curd, paneer, amongst other dairy solutions, which are targeted at consumption at home.
Angel Broking
Rating: Subscribe
The brokerage firm mentioned that in terms of valuations, the post-problem 9MFY21 annualised PE operates out to 16.4x (at the upper finish of theissue cost band), which is low compared to Parag Milk Foods (trading at 32.7x). Further, Dodla Dairy has shown improvement in operating margin with an effective working capital cycle. Angel Broking believes that Dodla Dairy would execute far better on the back of an raise in worth-added item mix.
Ventura Securities
Rating: Subscribe
Ventura Securities has valued the stock at Rs 580 (25x FY24E) representing prospective upside of 35.4 per cent from the IPO greater band cost of Rs 428 more than the next 24 months. Despite the lack of earnings development more than the forecast period (offered the higher base impact of net earnings for FY21), Ventura Securities expects a re-rating of the valuations offered the market place leadership, powerful sectoral development trends, enhanced efficiencies (by eliminating market place intermediaries), thrust on expanding retail footprint, debt absolutely free status, completion of capex cycle and higher return ratios.
HDFC Securities
Rating: Not rated
The brokerage firm mentioned that Dodla Dairy’s farmer friendly policies and continuous engagement with them with welfare applications have strengthened its relationships with farmers which in turn have strengthened its raw milk procurement approach. It provides a selection of initiatives for the farmers from whom it procures raw milk. The corporation undertakes study to lower the breeding cycle of cows and on connected activities such as semen choice for more productive cows. Investigation into genetic diversity and relationship in between HF breed cows and varied India cattle breed to lead to improvement of dairy herd genetics that impact well being, longevity and reproductive traits in cattle applied for raw milk production. While company’s operations are dependent on the provide of substantial amounts of raw milk, and inability to procure sufficient amounts of raw milk from farmers and third party suppliers, at competitive costs, might have an adverse impact on the enterprise, benefits of operations and economic situation.
JST Investments
Rating: Not rated
At upper cost band of Rs 428, it is priced at 15.4x P/E, 4.33x P/BV, 1.8x P/S (9mFY21 sales) and 1.35x P/S (FY21A Sales). The valuations are fantastic when compared to Heritage who has 13.2x P/E, .80x P/S, 3.31x P/BV and Hatsun who has 81.1x P/E, 3.59x P/S, 19.6x P/BV. At the exact same time management has guided for more Value added solutions, more OPM and more NPM development. Thanks to fantastic valuations, the IPO might see fantastic subscriptions and fantastic listing. The corporation management themselves have mentioned they are a pretty new corporation. In the lengthy term, we have no view as we would want to monitor this more as FY21 appears to be an aberration with other milk players also clocking in EBITDA development.
(The stock suggestions in this story are by the respective study analysts and brokerage firms. TheSpuzz Online does not bear any duty for their investment tips. Capital markets investments are topic to guidelines and regulations. Please seek the advice of your investment advisor prior to investing.)