Most analysts had advised buying the show for listing gains as well as for the long term, but with a good start in the secondary market, some say investors should see a profit.
“We recommended subscribing when Dodla Dairy went public. At CMP, the stock is trading at 23 times its earnings based on annualized earnings of 9MFY21, leaving little room for the upside. Therefore, we recommend that you book profits, ”said Amarjeet Maurya – AVP – Midcaps, Angel Broking.
Dodla Dairy is a Hyderabad-based company that sells fresh milk, ghee, butter, curd, paneer, gulab jamun, doodh peda, basundi and junnu for home consumption. It sells UHT milk, flavored milk, ice cream, and drinks such as buttermilk.
At the issue price, the share was valued at 16 times annualized earnings for fiscal year 21 on a post-issue basis. The Rs 520.17 crore IPO by the third largest dairy player was sold on June 16-18. The issue received offers for 38 80 64 950 shares, which is 45.62 times the size of the offer of 85 07569 shares.
In fiscal year 18-20, Dodla’s revenue grew 16% per year and EBITda increased 12% per year. Profit after tax (PAT) fell 6 percent per year over the same period. That said, the Ebitda margin for the nine-month period climbed to 14.6% from 6.6% in FY20.
Analysts said it was difficult to keep margins this high because it was achieved through cost-cutting measures. Management has also moved towards normalization of margins.
Dodla Dairy derives about 30 percent of its revenue from value-added products, the share of which is likely to accelerate in the future, which many see as a great benefit to the company.
“The show was reasonably priced compared to its peers, which also sparked a lot of interest in the counter outside of its presence in a niche space. However, the companies listed in this space have not done well so far, so we have to see how this company behaves going forward, ”said Hemang Jani, Head Equity Strategy,
On Monday, the stock closed up 15% at Rs 609. It peaked at Rs 633 during the day, up 48% from the issue price, which is also the top of the. circuit for action.