Buy Dodla Dairy, target price Rs 615: ICICI Securities

ICICI Securities has buy call on Dodla Dairy with a target price of Rs 615. The current market price of Dodla Dairy Ltd. is Rs 517.95. Time period given by analyst is one year when Dodla Dairy Ltd. price can reach defined target.

Dodla Dairy Ltd., incorporated in the year 1995, is a Small Cap company (having a market cap of Rs 3080.24 Crore) operating in FMCG sector.

Dodla Dairy Ltd. key Products/Revenue Segments include Food Products, Sale of services and Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 578.94 Crore, up 1.66 % from last quarter Total Income of Rs 569.48 Crore and up 16.06 % from last year same quarter Total Income of Rs 498.81 Crore. Company reported net profit after tax of Rs 26.86 Crore in latest quarter.

Investment RationaleThe brokerage models Dodla to report revenue and PAT CAGR of 13.7% and 14.3% respectively, over FY21-24E and RoCE to be upwards of 17% in FY24E. It remains structurally positive on Dodla due to its competitive advantages and strong growth opportunity in South India. It maintains BUY rating with a revised DCF-based TP of Rs615 (implied P/E of 19.4x FY24E EPS). Key risks: Delay in distribution and procurement expansion, and failure of some of the new products and potentially higher competitive intensity in South India.

Promoter/FII Holdings
Promoters held 62.54 per cent stake in the company as of 31-Dec-2021, while FIIs owned 10.94 per cent, DIIs 10.5 per cent.