At the issue price, the stock was valued at 16 times annualised FY21 earnings on a post-issue basis. The Rs 520.17 crore IPO by the third-largest dairy player was sold between June 16 and 18.
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Dodla Dairy shares made a strong market debut on Monday, as the scrip got listed at Rs 550 on NSE, a 28.50 per cent premium over its issue price of Rs 428. On BSE, the stock debuted at Rs 528, up 23.26 per cent.

At the issue price, the stock was valued at 16 times annualised FY21 earnings on a post-issue basis. The Rs 520.17 crore IPO by the third-largest dairy player was sold between June 16 and 18.

The issue received bids for 38,80,64,950 shares, which was 45.62 times the offer size of 85,07,569 shares. The quota meant for qualified institutional buyers (QIBs) category was subscribed 84.88 times while the shares reserved for non-institutional investors were subscribed 73.26 times. The shares offered for retail individual investors (RIIs) were subscribed 11.33 times.

The dairy owner procured 1.03 million litres of raw milk per day (MLPD) on an average, as of March 31, 2021. It has 13 processing plants with an aggregate installed capacity of 1.70 MLPD. It also has two skimmed milk powder (SMP) plants in Nellore and Vedasandur, which have an aggregate installed capacity of 15,000 and 10,000 kgs per day, respectively.

Over FY18-20, Dodla’s revenues rose 16 per cent annually and Ebitda by 12 per cent annually. Profit after tax (PAT) fell 6 per cent annually during the same period. Value products that accounted for 27.18 per cent of total revenues in FY20 commanded 24.68 per cent of the revenue pie in the first nine months.

That said, Ebitda margin for the nine-month period soared to 14.6 per cent from 6.6 per cent in FY20. Analysts said maintaining such high margins would be difficult for the company, as it was achieved on cost-cutting measures. The management has also guided towards normalisation of margins.

THE Dairy Industry Code of Conduct has brought about a “significant culture change” within the dairy sector and helped increase competition at the farmgate, according to Australian Competition & Consumer Commission deputy chair Mick Keogh.

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