Dodla Dairy's ₹520 crore IPO isn't to expand into new markets but to strengthen its foothold where it already exists
- Dodla Dairy's initial public offering (IPO) will go live on June 19 with a price band of ₹421 to ₹428.
- The Hyderabad-based dairy company is the third largest in India in terms of milk procurement and has a foothold in southern India.
- The firm plans to use its new capital to repay the loans and fund its working capital requirements.
The Hyderabad-based firm has announced its plans to issue an initial public offering (IPO) worth ₹520 crore as it looks to strengthen its footprint in the southern Indian states. This includes a fresh issue of ₹50 crore and offer for sale (OFS) of ₹470 crore.
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|IPO opening||16 June 2021|
|IPO closing||18 June 2021|
|Likely allotment||23 June 2021|
|Likely listing||28 June 2021|
The company’s shares will be going for ₹421 to ₹428 apiece. Applicants will be able to bid for lots of 35 shares, but an individual can apply for no more than 13 lots.
The aspiring dairy firm plans to use ₹32.26 crore to repay the loans it has already taken out and fund its working capital requirements with ₹7.15 crore. Whatever it left over, will be put towards general corporate purposes, which includes hiring new talent, research and development, and digitisation.
|Price band||₹421 to ₹428|
|Market lot||35 shares|
|Minimum order value (single lot)||₹14,980|
|Maximum order value (13 lots)||₹194,740|
Only 15% of the IPO will be available to non-institutional investors, with 35% for retail investors and 50% for qualified institutional buyers (QIBs).
What does Dodla Dairy do?
Despite the impact of the COVID-19 pandemic, Dodla Dairy reported a profit of ₹74.78 crore for the six months ending September 2020. The strengthening of the cooperative model of cattle farming has helped Dodla’s growth in the milk processing segment.
Dodla Dairy procures nearly 1.03 million litres of raw milk per day — that is enough to fill up half an Olympic sized swimming pool — within a network of over 1 lakh farmers through 6,771 village level collection centres, 232 dairy farms and third party suppliers.
AdvertisementIt takes this milk and processes it into packaged milk and other value added products like ghee, butter, curd, paneer, gulab jamun and other items that are targeted at home consumption.
Once processed, the second leg of the company’s operations include distribution and marketing across Andhra Pradesh, Karnataka, Tamil Nadu, Telangana and Maharashtra. What many may not know is that the company also has operations in the African countries -- Uganda and Kenya.
The company doesn’t have any plans to expand, but will be looking to further strengthen its brand in regions where it already exists. According to the company, its main competitors include Hatsun Agro Products, Heritage Foods, Tirumala Milk Products and Creamline Dairy Products.
|Company||Net profit as of 31 March 2020|
|Dodla Dairy||₹49.87 crore|
|Hatsun Agro Products||₹1,12.27 crore|
|Heritage Foods||(₹169.4 crore)|
|Parag Milk Foods||₹93.69 crore|
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