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Dodla Dairy: Should you invest?

January 24, 2022
in Learn, Personal Finance, Stocks
Dodla Dairy: Should you invest?

About the company:

Dodla Dairy Limited, founded in 1995, is a South Indian integrated dairy firm that specializes in the sourcing, processing, distribution, and marketing of milk and other dairy products. It processes and sells milk, including standardized, toned, and double toned milk, as well as curd, butter, ghee, ice cream, and flavored milk, among other dairy products.

It primarily operates in India under the brand names “Dodla,” “Dodla Dairy,” and “KC+,” while serving the international market under the brand names “Dodla Dairy,” “Dairy Top,” and “Dodla+.” The company primarily serves the Indian market segments of Telangana, Andhra Pradesh, Karnataka, Tamil Nadu, and Maharashtra, as well as the international market segments of Uganda and Kenya.

HeadquarterHyderabad, Andhra Pradesh
SectorFMCG Sector and Food Processing Industry.
Area of OperationTelangana, Andhra Pradesh, Tamil Nadu and Maharashtra (National) Kenya, Uganda, Singapore (International)
CEOVenkat Krishna Reddy Busireddy (Past 26 years).
ChairmanSesha Reddy
Board of Committees7 Independent directors out of 13 members.

Promoters & their shareholding pattern:

Promoters & their remuneration:

Subsidiaries:

• Dodla Holdings Pte Ltd. (Singapore)
• Lakeside Dairy Ltd. (Uganda):

The company offers a wide variety of milk products, including fresh milk, butter, mozzarella cheese, flavored milk, ice cream, and skimmed milk powder, ensuring that clients receive high-quality, ultra-heat-treated dairy products that are safe for human consumption.

• OrgaFeed Pvt Limited (Andhra Pradesh):

The business of OrgaFeed is to procure raw material, manufacture cattle feed and sell the same through their network of milk collection centres of 5740 in number.

Competitors:

  • Amul
  • Mother Dairy (North)
  • Prabhat Dairy
  • Parag Milk Foods (South)

Shareholding pattern:

dodla

Big Investors:

• SBI Group with 7.37%
• International Finance Corporation 4.59%
• Birla Group with 1.56%

Foreign Operation:

•Dairy production in the African region plays a very vital role in the regions economic and sustainable development.
•The production is huge in the region. Local milk production in West Africa has already risen by 50% between 2000 and 2016 to about 4 billion liters in 2019.
•Local production does not yet have the capacity to meet 100% of demands in the sector. Only 50% of consumption comes from local production, and imported milk powder helps meet the remaining needs.
•Despite substantial growth in recent years, the dairy sector in Africa faces major drawbacks such as high production costs and low yields. This is due to the lack of infrastructure and appropriate equipment in the production process.

Singapore•Wholly owned subsidiary with the name of Dodla Holdings Pte Ltd.
•Incorporated on June 2014
•First overseas expansion
Uganda•Incorporated on July 2014 (Exactly after 1 month of singapore expansion)
•Wholly owned subsidiary of Singapore firm which is named Lakeside Dairy Ltd.
•Aquired the business of Hillside Dairy & Agriculture Ltd.
•Have local processing unit at Mbarara
Kenya•Incorporated on May 2017
•Purely engaged in the trading of dairy products in Kenya

IPO Details:

Details•The company was listed in the month of June 2021.
•The upper price band was Rs 428
•The promoters holding declined from 68.52% to 64.17%. (Offer for sale)
•The company had a strong subscription demand.
Subscription detailsQualified Institutions- 84.88 times
NIIs- 73.26 times
Retail- 11.34 times
Total- 45.62 times

Profit and Loss Statement:

Standalone P&L

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Revenue from Operations1,1821,4101,5371,5981,9881,837
Expenses1,0871,3241,4321,4821,8881,619
Operating Profit958610511699218
Profit before tax7468757948165
Net Profit3646515228108
EPS in Rs108.65140.1154.429.415.1118.58

Standalone Balance Sheet

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21Sep-21
Equity Capital33356565859
Reserves241287340341341546647
Borrowings1091361261581609813
Total Liabilities436531601723733903939
Fixed Assets160232296461482492495
Investments951091096755104204
Other Assets 145159181185187298233
Cash Equivalents9711102716083
Loans n Advances5331536233134
Total Assets436531601723733903939

Standalone Cash Flow

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Cash from Operating Activity1315983118103217
Profit from operations10083106120101219
Inventory536-4717626
Payables091612918
Working capital changes64-8-816548
Direct taxes-34-22-16-19-2-50
Cash from Investing Activity-96-79-61-140-45-166
Fixed assets purchased-90-73-67-90-68-53
Investments purchased-35-260-143-74-55
Other investing items100-960-72
Cash from Financing Activity-3719-4062-2611
Proceeds from shares00000100
Proceeds from borrowings30340105250
Repayment of borrowings-5-5-32-33-16-63
Net Cash Flow-2-1-18393361

Financial Ratios:

Stock Price:
1. Current PriceRs 560
2. Market CapRs 3,330 Cr
3. Yearly fluctuationRs 428-674
P/E Ratio:

(It indicates the market value of stock as compared to the company’s earnings)

1. Company’s ratio34.3
2. Industry74
3. Prabhat Dairy (973cr mark cap)-8.48
4. Parag Milk Foods (1134cr mark cap)27.1
ROCE Ratio:

(It basically indicates the profit company is making from its total capital invested)

1. Company’s ratio28.4%
2. Industry–
3. Prabhat Dairy (973cr mark cap)-21.70%
4. Parag Milk Foods (1134cr mark cap)6.73%
ROE Ratio:

(It basically indicates the profit company is making from its equity invested)

1. Company’s ratio21.70%
2. Industry–
3. Prabhat Dairy (973cr mar cap)-23.30%
4. Parag Milk Foods (1134cr mark cap)2.38%

Positives aspects:

  1. Company has reduced debt.
  2. Company has delivered good operating profit growth of 25% CAGR over last 5 years.
  3. Large product portfolio.
  4. Leading player in southern region.
  5. ICRA upgraded its long term rating AA- from A+.
  6. The management team is very well experienced and is in this business in the last 25+ years.
  7. Generated huge cash flow from operating activity.
  8. There has been a stable growth over the years.
  9. Supported by Big Investors and had a impressive IPO subscription.
  10. 50% of the directors are independent.
  11. Increase in cash equivalent.
  12. Good PE ratio when compared to the industry.
  13. Making good when compared to its peers. ROE & ROCE are indicative of this.

Negative aspects:

  • The company has delivered a poor sales growth of 9% over past five years.
  • Unclear International Operation.
  • Major dip in this years sales.
  • One issue is that it has a limited area of operation which majorly includes southern region but slowly trying to spread its business towards East region.

Read Next: Lumpsum Investment

For more information, reach us at [email protected]

Team, MyGoalMySip.

Tags: FUNDSINVESTMENTMUTUAL FUNDMUTUAL FUNDSSAVINGS
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    About Us

    MyGoalMySip is an Online Mutual fund investment platform powered by Prudent Wealth. As an investor, it might be hard to find the perfect investment opportunity; therefore, we’re here to help you make an informed decision.

    Our goal is to educate people and make them financially literate, and at the same time guide you in your investment journey, in short MyGoalMySip is your investment buddy.

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