Last updated: 16 Jun, 2021 | 04:52 am
Dodla Dairy IPO is set to raise up to Rs 520 crore via IPO which opened on 16th June, Wednesday. Here are the details:
About Dodla Dairy
About the issue
Dodla Dairy has shown an exceptional improvement in its margins and bottom-line growth in the Apr-Dec 20 period, on the back of heavy cost-cutting measures and improvement in its sales mix (of value-added products). Going forward, it remains to be seen if Dodla is able to sustain such a strong financial performance.
The vast improvement in performance reflects in the company’s valuation too. At the higher end of the price band, Dodla Dairy is priced at 51 times FY20 earnings, while just 16.4 times Apr-Dec 20 EPS (annualized). In comparison, the Hatsun Agro quotes at a PE of 180.4 times and 82.2 times of its FY20/FY21 EPS. Heritage Foods quotes at 13.4 times of its FY21 EPS. The valuations are at par with Heritage Food while at a steep discount to Hatsun Agro. Given its positioning in the industry, the asking price seems to be reasonable.
Given factors such as market leadership, strong growth outlook, improved efficiencies due to better value-added mix, healthy margins, debt-free status, and robust return ratios, we remain positive on the prospects of the issue from a long-term perspective.