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At the IPO price band of Rs 880-900, the offer is valued at 24.5/25 times its FY2021 EPS considering the diluted equity at the upper and lower price band.

The initial public offering of Dodla Dairy will open for subscription on Wednesday, June 16. The company has set its price band at Rs 421-428 per share for a Rs 520-crore IPO. The issue will close on June 18.

The equity shares of both companies will be listed on NSE and BSE.

Here are 10 key things to know before subscribing to the public issue:

About the company: Dodla Dairy was incorporated on May 15, 1995, at Hyderabad. The company sell fresh milk, ghee, butter, curd, paneer, gulab jamun, doodh peda, basundhi and junnu, which are targeted at consumption at home. They sell UHT milk, flavoured milk, ice cream and beverages such as buttermilk under their brand, primarily for direct consumption.

Issue size: Dodla Dairy IPO offer comprises a fresh issue of up to Rs 50 crore and an offer for sale of up to 1,09,85,444 equity shares by promoters and investors.

Objective of the offer: The funds raised through the public offer will be utilised for repaying debts of Rs 32.26 crore availed from ICICI Bank, the Hongkong and Shanghai Banking Corporation (HSBC) and HDFC Bank, and for capital expenditure requirements of around Rs 7.15 crore. As of December 31, 2020, the company had a total debt of Rs 87.37 crore comprising term loans, working capital facilities and NCDs.

Grey market premium: Dodla Dairy traded at a premium of 143-148 per share on Tuesday in the grey market, which indicates that investors are bullish on the IPO.

Allotment: The allotment date for Dodla Dairy is June 23. Initiation of refund will happen on June 24 while shares will be credited to the demat account of allottees on June 25. Shares of the company are expected to be listed on June 28.

Should you subscribe: Marwadi Shares and Finance has given a ‘Subscribe’ rating to Dodla Dairy. “The company is one of the largest dairy companies in the branded consumer market with a strong distribution network and is available at reasonable valuation compared to its peers,” the brokerage said.

Angel Broking is also bullish on Dodla Dairy. It has also given a ‘Subscribe’ rating to the IPO. “In terms of valuations, the post-issue 9MFY21 annualised PE works out to 16.4 times (at the upper end of the issue price band), which is low compared to Parag Milk Foods (trading at 32.7x). Further, Dodla Dairy has shown improvement in the operating margin with an efficient working capital cycle. Going forward, we believe that the company would perform better on the back of increase in value-added product mix,” the brokerage said.

Axis Capital and ICICI Securities are the investment bankers of the company’s initial share sale.