Dodla Dairy IPO subscribed 2 times so far; should you invest?

Dodla Dairy’s initial public offering has been subscribed over 2 times so far on the second day of subscription on Wednesday. The initial public offering (IPO) received bids for 1,85,40,935 shares at around 12.30 pm against 85,07,569 shares on offer, according to NSE data.

The IPO comprises a fresh issue of Rs 50 crore and an offer-for-sale of 1,09,85,444 equity shares. Its price range is at Rs 421-428 per share. At the upper end of the price range, the IPO is expected to fetch Rs 520.17 crore. Dodla Dairy, a leading dairy company in southern India, on Tuesday, said it has raised a little over Rs 156 crore from anchor investors.

The proceeds from the issue will be used for payment of certain borrowings, funding capital expenditure requirements of the company, and for general corporate purposes.

The company’s operations in India are primarily across the four states — Andhra Pradesh, Telangana, Karnataka and Tamil Nadu. Its international operations are based in Uganda and Kenya.

Should you subscribe?
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.