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Earlier, Hyderabad based dairy firm disclosed that it is set to launch Initial Public Offering (IPO) on June16, Wednesday. It is the third company followed by Sona Comstar and Shyam Metallics to launch an IPO this week. Both the BSE and the National Stock Exchange will be listing the equity shares issued by the company. Axis Capital and ICICI Securities are the book running lead managers to the offers.
Key things to know before subscribing the public issue :
Public Issue
The IPO posses a fresh issue of around Rs 50 crore and an offer for sale up to 1,09,85,444 equity shares by the involved selling shareholders. The investor TPG Dodla Dairy holdings Ltd will offer for sale comprising up to 92 lakh equity shares. The offer for sale also facilitates selling of up to 4,16,604 equity shares by Dodla Sunil Reddy, 10,41,509 equity shares by Dodla family Trust, and 3,27,331 equity shares by Dodla Deepa Reddy. These are all a part of promoter and promoter group.
IPO Dates
The public issue is set to commence on June 16 and is to get concluded by June 18. If there are any anchor book it is likely to open for a day on June 15, a day before the issue opens for non-institutional investors, retail and qualified institutional buyers.
Price Band
The firm along with discussions with merchant bankers have set the price band for the offer at Rs 421-428 per equity share.
Fund Raising and objects of Issue
The firm proposes to obtain Rs 520.17 crore at a higher end of the price band.
The net proceeds of a fresh issue is expected to be used for repaying of certain borrowings aided from ICICI bank, HongKong and Shanghai Banking Corporation and HDFC Bank by the firm for funding capital expenditure requirements (Rs 7.15 crore) and general corporate purposes.
Lot Size and Reserved portion Category wise
Investors are allowed to bid for a minimum of 35 equity shares and thereafter in multiples of 35 equity shares. As a result, the retail investors can approach for shares worth a minimum of Rs 14,980 and maximum of Rs 1,94,740.
It is reported that the firm has reserved up to 50 per cent of offer size for qualified Retail Buyers, around 15 per cent for non-institutional investors and the remaining 35 per cent for the retail investors.
Company Profile
Dodla dairy is a South India based integrated dairy company. It obtain its primary source of revenue from its sale of milk and dairy based value added products in the branded consumer markets.
It provides services across five Indian states namely, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, and Maharashtra. Its international services are based in Uganda and Kenya.
The firm processes and sells retail milk and produces dairy based value added products like curd, Ultra high temperature processed ghee, buttered, flavored milk, and ice creams. Furthermore, it manufactures and sells cattle feed to farmers through procurement networks.
It is reported that till March 2021 , its procurement operations comprised of 6771 village level collection centers, 232 village dairy firms, third party suppliers and around 94 chilling centers.
Competitive strengths and strategies
a) The company posses a wide range of products under ‘Dodla Dairy’ and ‘Dodla’ brand.
b) It comprises of an integrated business model along a well defined procurement and distribution capabilities in a cost-efficient way.
c) It firmly believes in farmer friendly policies with continuous communications with them on the grounds of welfare programmes. This has resulted in strengthening its relationships with the farmers and supported its raw milk procurement process.
d) It has recorded a consistent growth over the past three years in terms of financial and operational metrics.
e) The company involves experienced board along with senior management team.
Strategies
a) The company desires to improve its brand visibility while expanding the reach of the products.
b) It further looks forward to strengthen its procurement and processing operations.
c) it expects to keep growing domestically and internationally by organic and inorganic growth to increase its presence and revenue.
d) The company hopes to raise its revenue from dairy based value added products.
e) It commits to implement scientific techniques in dairy farming and allied activities in the coming years.
Financial and Peer Comparison
The company has been constant in every sphere in the past three financial years. its revenue from services have increased at a CAGR of 15.98 per cent during FY18 and FY20 while EBITDA have gained at a CAGRA of 11.81 per cent at the same time.
its revenue, EBITDA and profit after tax for a nine month period that concluded in December 2020 stood to be Rs 1413.5 crore , Rs 206.5 crore and Rs 116.38 crore respectively.
It debt to equity ratio was 0.17 till December 2020, 0.35 inFY20, 0.39 in FY19 and 0.37 in FY18.
Revenue constituted 72.81 per cent and 27.18 per cent respectively in FY20, 75.32 per cent and 24.68 per cent respectively in the nine month that ended in December 2020.
Promoters and management
Dodla Sunil Reddy, Dodla Sesha Reddy and the Dodla Family Trust are the promoters of the company. They are reported to hold an aggregate of 2,49,70,631 equity shares.
TPG Dodla Dairy holding posed 25.77 per cent stake and International Finance Corporation has around 4.55 per cent shareholding in the company.
Dodla Sesha Reddy is the chairman and non-executive director on the board of the company and currently is the director of Nelcast and Dodla Enterprises. Dodla Sunil Reddy is the managing director of the company.
Raja Rathinam, Ponnavolu Divya, Rampraveen Swaminathan and Raman Tallam Puranam are the independent directors on the board.
Allotment, refunds and listing dates
Following, the conclusion of the public issue, the finalization on the grounds of allotment with designated stock exchange is to be held on June23, and the funds will get refunded by June 24.
On June 25, equity shares allotted will be credited to the eligible investor’s account followed by trading in equity shares which is likely to begin from June 28.