Dodla Dairy IPO: Brokerage Views

This post on Dodla Dairy IPO attempts to bring out consolidated brokerage views , subscription information, Grey Market Premium (GMP) and anchor investor information where applicable. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Dodla Dairy IPO or not.

Related Posts : Dodla Dairy IPO Review

Dodla Dairy IPO: Grey Market Premium etc.

  • 16-6-21 GMP Rs. 70

Subscription: Dodla Dairy IPO ( x times)

Consolidated Brokerage Views on Dodla Dairy IPO

Anand Rathi :”Subscribe: Dodla Dairy is a technology service provider specialising in communication services to enterprises. It operates as a CPaaS company that provides ‘Communication Platform as a Service’ to enterprise clients. The firm reported strong revenue growth and its future prospects seem sound.”

Angel Broking: “In terms of valuations, thepost-issue 9MFY21 annualised PE works out to 16.4x (at the upper end of theissue price band), which is low compared to Parag Milk Foods (trading at32.7x). 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.”

Capital Market : ” Score 44/100 ; The EPS for FY20 was R 8.4 and that of 9mFY21 annualised was R 26.1. Thus on FY20/annualised 9mFY21 EPS the PE works out to about 51 times and 16.4 times respectively. In comparison the Hatsun Agro quotes at a PE of 180.4 times and 82.2 times of its FY20/FY21 EPS. The Heritage Foods quotes at 13.4 times of its FY21 EPS.”

Choice Broking: “With rising health awareness post the pandemic, changing demographics and rising preferences for packed & branded milk products, the demand of milk & milk products are likely to continue to be strong. Additionally, the improved demand from hotels, restaurants and cafes post pandemic would further aid growth of the dairy sector. DDL being one of the largest players in South India with integrated operations and wide product portfolio is expected to benefit from the same. Thus considering the above observations we assign a “SUBSCRIBE” rating for the issue.

GEPL: “The issue is priced at a post issue annualized PE of ~16.5x on FY21 EPS. We believe that the uptick in margins in 9MFY21 will normalize to around 10 – 11% as guided by the management.The focus on VAP (Value Added Products) also is a positive sign. The unorganised / smaller dairies are also impacted due to liquidity issues and weaker balance sheet. The organized sector will continue to structurally gain market share. The key downside risk, however, include a sharp rise in raw material costs. We recommend a SUBSCRIBE rating to the issue.”

Geojit: At the upper price band of Rs.428, DDL is available at P/E of 16.4x (annualized basis on FY21E EPS of Rs.26.1) which appears fully priced. We assign a “Subscribe” rating for the issue on a long-term basis considering the significant market presence, brand visibility, plans to launch new milk products in the near term and lean balance sheet.

Religare : “Dodla Dairy’s integrated business model provides end-to-end solutions such as procurement, processing and distribution & marketing in a cost-efficient manner. Further, it has maintained long term relationships with farmers as well as customers. So, on one side, they provide strong support to farmers while on the other hand, it fulfills customers demand by providing a diversified product portfolio. Also, the company’s finances are growing at a steady pace. Going forward, it has plans to introduce more value-added products, expand into new markets and look for organic/inorganic growth, invest in modern technology to improve milk procurement as well as operating efficiency. We have a positive view on the company from the long term perspective. “

SMC: “Score 2/5 ; Considering the P/E valuation, on the upper end of the price band of Rs.421, the stock is priced at pre issue P/E of 21.10x on its annualised FY21 EPS of Rs. 19.95. Post issue, the stock is priced at a P/E of 21.52x on its EPS of Rs. 19.56. Looking at the P/B ratio at Rs. 421 the stock is priced at P/B ratio of 4.47x on the pre issue book value of Rs.94.25 and on the post issue book value of Rs. 100.80 the P/B comes out to 4.18x.”

SP Tulsiyan Website: “9MFY21 margin is an aberration and cannot used as a benchmark. Commoditized and crowded industry structure with poor sector track record make this IPO an ‘avoid’.”

Ventura Securities: “We value the stock at Rs 580(25xFY24E) representing potential upside of 35.4% from the IPO higher band price of Rs 428 over the next 24 months. DDLValuations look reasonable as compared to peers”


Standard disclaimer: Standard disclaimer: I am not a SEBI registered analyst /investment adviser and above information is collated from various online sources and is for educational purpose only. Please visit individual brokerage sites to read the actual reports. Please do not make your investment decisions based on this info as it is not complete and exhaustive. Please do your own due diligence as stock market investments have high degree of inherent risk.

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