Please refer to important disclosures at the end of this report
1
Dodla Dairy Limited (DDL) was incorporated on May 15 1995 at Hyderabad.
The company sell fresh milk, ghee, butter, curd, paneer, gulab jamun, doodh
peda, basundhi and junnu, which are targeted at consumption at home. They
sell UHT milk, flavoured milk, ice cream and beverages such as buttermilk
under their brand, primarily for direct consumption.
Positives:
(a) Consumer focused dairy company with a diverse range of products
under the “Dodla Dairy” and “Dodla” brands (b) Integrated business model with
well-
defined procurement, processing and distribution capabilities (c) Focused
engagement and long term relat
ionship with dairy farmers (d) Experienced
Board and senior management team.
Investment concerns:
(a) DDL reported negative consolidated profit CAGR (over
FY2018-20), hence profit growth concerns remain; (b)
Inability to procure
sufficient good quality
raw milk at commercially viable prices may adversely
impact the operation as milk is a key raw material for all dairy products.
Outlook & Valuation: In terms of valuations, thepost-
issue 9MFY21 annualised
PE works out to 16.4x (at the upper end of theissu
e price band), which is low
compared to Parag Milk Foods (trading at 32.7x).
Further, DDL has shown
improvement in operating margin with efficient working capital cycle.
Going
forward, we believe that DDL would perform better on the back of increase in
value added product mix.
Thus, we recommend a subscribe rating on the issue.
Key Financials
Y/E March (Rs cr) FY2018 FY2019 FY2020
9MFY21
Net Sales
1,590
1,692
2,139
1,414
% chg
-
6.4
26.5
Net Profit
57
63
50
116
% chg
-
10.5
(20.5)
OPM (%)
7.1
7.9
6.6
14.6
EPS (Rs)
10.2
11.3
9.0
20.9
P/E (x)
41.9
38.0
47.8
-
P/BV (x)
7.0
5.9
5.5
-
RoE (%)
16.7
15.4
11.5
-
RoCE (%)
18.0
16.9
15.5
-
EV/Sales (x)
1.5
1.5
1.2
-
EV/EBITDA (x)
21.6
18.7
17.5
-
Angel Research; Note: Valuation ratios based on pre-issue outstanding shares and at upper end
of the price band
Subscribe
Issue Open: June 16, 2021
Issue Close: June 18, 2021
Offer for Sale: 1.1cr share
QIBs 50%
Non-Institutional 15%
Retail 35%
Promoters 64.2%
Others 35.8%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital:
`
59.5cr
Issue size (amount):
`
520
Price Band:
`
421-428
Lot Size: 35 shares
Post-issue mkt.cap:
`
2505*–2546cr**
Promoters holding Pre-Issue: 68.5%
Promoters holding Post-Issue: 64.2%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue:
`
50cr
Issue Details
Face Value:
`
10
Present Eq. Paid up Capital:
`
55.7cr
Amarjeet S Maurya
+022 39357600, Extn: 6831
amarjeet.maurya@angelbroking.com
Dodla Dairy Ltd
IPO Note |
Retail
June 15, 2021
Dodla Dairy Ltd |
IPO Note
June 15, 2021
2
Company background
Incorporated in 1995, Dodla Dairy Limited is an integrated dairy company in South
India that is engaged in the procurement, processing, distribution, and marketing of
milk and other dairy products. It processes and sells milk including standardized,
toned, and double toned milk, and produces dairy products like curd, butter, ghee,
ice cream, flavoured milk, etc.
Its Indian operations are mainly undertaken under the brand name of "Dodla",
"Dodla Dairy", and "KC+" whereas it serves overseas market under the brand name
of "Dodla Dairy", "Dairy Top", and "Dodla+". Telangana, Andhra Pradesh,
Karnataka, Tamil Nadu, and Maharashtra are the key Indian market segments
served by the company while in the overseas market, it mainly serves countries like
Uganda and Kenya.
It has a total of 13 processing plants to process raw material into packaged milk
and manufacture dairy-based value-added products. The firm has a strong
distribution network of 40 sales offices, 3336 distribution agents, 863 milk
distributors, and 449 product distributors across 11 states in India.
Issue details
DDL is raising `520cr through fresh issue (`50cr) and Promoter & investors are
selling equity worth `470cr through offer for sale in the price band of `421-428.
Exhibit 1: Pre and post IPO shareholding pattern
No of shares (Pre-issue)
% No of shares (Post-issue) %
Promoters
39,961,356 68.5%
38,175,912 64.2%
Others
18,363,155 31.5%
21,316,823 35.8%
Total 58,324,511 100.0%
59,492,735 100.0%
Source: Source: RHP, Note: Calculated on upper price band
Objectives of the Offer
To finance business working capital requirements.
To finance capital expenditure requirements.
To meet general corporate purposes.
Dodla Dairy Ltd |
IPO Note
June 15, 2021
3
Exhibit 2: Consolidated Income Statement
Y/E March (` cr) FY2018
FY2019
FY2020
Net Sales
1,590
1,692
2,139
% chg
6.4
26.5
Total Expenditure
1,478
1,558
1,998
Raw Material
1,232
1,257
1,641
Personnel
65
77
91
Others Expenses
181
224
267
EBITDA
113
134
141
% chg
19.0
5.0
(% of Net Sales)
7.1
7.9
6.6
Depreciation& Amortisation
28
37
49
EBIT
85
97
92
% chg
14.5
(5.5)
(% of Net Sales)
5.3
5.7
4.3
Interest & other Charges
11
12
16
Other Income
7
8
6
(% of PBT)
8.1
8.3
7.7
Recurring PBT
80
93
82
% chg
16.0
(12.2)
Tax
24
31
32
(% of PBT)
29.3
32.7
39.1
PAT (reported)
57
63
50
% chg
10.5
(20.5)
(% of Net Sales)
3.6
3.7
2.3
Basic EPS (`)
10.2
11.3
9.0
% chg
10.4
(20.5)
Source: Company, Angel Research
Dodla Dairy Ltd |
IPO Note
June 15, 2021
4
Consolidated Balance Sheet
Y/E March (` cr)
FY2018
FY2019
FY2020
SOURCES OF FUNDS
Equity Share Capital
3
56
56
Reserves& Surplus
336
351
378
Shareholders Funds
340
406
433
Total Loans
132
167
160
Deferred Tax Liability
33
37
47
Total Liabilities
505
610
641
APPLICATION OF FUNDS
Gross Block
373
583
662
Less: Acc. Depreciation
46
82
126
Net Block
327
500
536
Capital Work-in-Progress
16
11
11
Investments
67
26
12
Current Assets
197
214
241
Inventories
134
125
120
Sundry Debtors
4
7
7
Cash
14
22
69
Loans & Advances
15
34
15
Other Assets
31
26
30
Current liabilities
116
153
171
Net Current Assets
81
61
70
Deferred Tax Asset
14
11
11
Mis. Exp. not written off
-
-
-
Total Assets
505
610
641
Source: Company, Angel Research
Dodla Dairy Ltd |
IPO Note
June 15, 2021
5
Consolidated Cash Flow Statement
Y/E March (Rs cr)
FY2018
FY2019
FY2020
Profit before tax
80
93
82
Depreciation
28
37
49
Change in Working Capital
(10)
15
33
Interest / Dividend (Net)
11
11
15
Direct taxes paid
(17)
(19)
(12)
Others
(4)
(2)
(2)
Cash Flow from Operations
87
136
166
(Inc.)/ Dec. in Fixed Assets
(71)
(97)
(95)
(Inc.)/ Dec. in Investments
5
(51)
18
Cash Flow from Investing
(66)
(148)
(76)
Issue of Equity
0
0
0
Inc./(Dec.) in loans
(34)
71
7
Dividend Paid (Incl. Tax)
0
0
(18)
Interest / Dividend (Net)
(8)
(11)
(14)
Cash Flow from Financing
(41)
60
(26)
Inc./(Dec.) in Cash
(20)
48
64
Opening Cash balances
(23)
(43)
5
Closing Cash balances
(43)
5
69
Source: Company, Angel Research
Dodla Dairy Ltd |
IPO Note
June 15, 2021
6
Key Ratios
Y/E March FY2018
FY2019 FY2020
Valuation Ratio (x)
P/E (on FDEPS)
41.9
38.0
47.8
P/CEPS
28.1
23.9
24.1
P/BV
7.0
5.9
5.5
EV/Sales
1.5
1.5
1.2
EV/EBITDA
21.6
18.7
17.5
EV / Total Assets
4.8
4.1
3.8
Per Share Data (Rs)
EPS (Basic)
10.2
11.3
9.0
EPS (fully diluted)
10.2
11.3
9.0
Cash EPS
15.2
17.9
17.8
Book Value
61.0
73.0
77.9
Returns (%)
ROCE
18.0
16.9
15.5
Angel ROIC (Pre-tax)
21.7
18.5
17.9
ROE
16.7
15.4
11.5
Turnover ratios (x)
Asset Turnover (Gross Block)
4.3
2.9
3.2
Inventory / Sales (days)
31
27
21
Receivables (days)
1
2
1
Payables (days)
15
20
14
Working capital cycle (ex-cash) (days)
16
9
8
Source: Company, Angel Research
Dodla Dairy Ltd |
IPO Note
June 15, 2021
7
Research Team Tel: 022
-
39357800 E
-
mail: research@angelbroking.
com Website:
www.angelbroking.com
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