Dodla Dairy, KIMS IPO open for subscription; should you invest?

Initial public offerings by Krishna Institute of Medical Sciences (KIMS) and Dodla Dairy opened for subscription on Wednesday, June 16. While the former aims to raise around Rs 2,144 crore from the primary market, the latter is planning to garner Rs 520 crore.

KIMS has fixed a price band of Rs 815-825 a share for the IPO. On the other hand, Dodla Dairy has set a price band at Rs 421-428 per share. Both the public offers will close on Friday, June 18.

Brokerages bullish on both the IPOs

Geojit Financial Services has assigned a ‘Subscribe’ rating to Dodla Dairy. “The company is available at P/E of 16.4 times 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,” Geojit Financial Services said.

Arihant Capital advised investors to subscribe to Dodla Dairy for listing gains. “We believe the key determinants of revenue growth, as well as profitability for Dodla Dairy in the coming 3-5 years, will be strengthening direct milk procurement, right product mix, rising acceptance of value-added milk and distribution expansion. Hence, we believe the IPO can be ‘Subscribed’ for listing gain,” the brokerage said in a report.

The public offer subscribed 28% on the first day of the offer till 11.25 am (IST). The IPO has received bids for 2,37,8530 so far against 85,07,569 shares offered by the company.

On the other hand, ICICI Securities has a ‘Subscribe’ rating on KIMS. The company owns one of the largest hospital chains in AP and Telangana. It reported Rs 1340.1 crore of revenues and Rs 381.0 crore of adjusted EBITDA in FY21, the highest in AP and Telangana. It has 3,064 beds as of 9MFY21, which is 2.2 times more beds than the second-largest provider in these regions.

“KIMS has achieved healthy profitability in both Tier I and Tier II, III markets by identifying markets with significant underserved healthcare demand and delivering quality healthcare services at affordable prices, which, in turn, drives patient volumes. As of FY21, KIMS’ debt-to-adjusted EBITDA ratio was 0.71 times and the gearing ratio was 0.31x compared to the industry range of 0.1-5.2 times. It has achieved strong free cash flow by effectively managing capex. KIMS is one of only three hospitals in India that are rated AA by Crisil,” ICICI Securities said in a report.

The public offer got subscribed around 4% on the first day of the bidding process at around 11.35 am (IST). The issue has received bids for 6,36,930 shares against 1,44,13,073 shares offered by the company.

Ventura Securities also has a ‘Subscribe’ rating on KIMS. “KIMS strong brand equity, and cluster-based expansion in adjacent markets of Central India (Indore, Aurangabad, Raipur & Nagpur), Odisha (Bhubaneshwar), Karnataka (Bengaluru and greater Karnataka) and Tamil Nadu (Chennai) augurs well for sustaining high growth with strong profitability,” Ventura Securities said.