The period given by the analyst is one year when the price of Dodla Dairy Ltd. can achieve the defined goal.
Dodla Dairy Ltd., incorporated in 1995, is a small cap company (with a market capitalization of Rs 3572.84 Crore) operating in the FMCG sector.
The main product / revenue segments of Dodla Dairy Ltd. include food products, sale of services and scrap metal for the year ending March 31, 2021.
For the quarter ended 30-06-2021, the company reported total consolidated income of Rs 514.65 crore, down -3.50% from last quarter in total income of Rs 533.34 crore and unchanged 0.00% over last year same quarter total income of Rs Crore. The company reported after-tax net profit of Rs 36.07 crore last quarter.
Justification of the investment
The brokerage models revenue and PAT CAGRs of 14.2% and 17.6%, respectively, in FY21-23E. We expect a RoE above 17% in FY23. The brokerage initiates a hedge on the stock with a note of BUY and a DCF-based target price of Rs700 (24x FY23E). Main risks: Delay in expanding distribution and purchasing, failure of some of the new products and potentially higher competitive intensity in South India.
Promoter / FII Holdings
The promoters held 62.5% of the company’s capital as of June 30, 2021, while the FIIs held 9.4%, the DII 9.3% and the public and others 18.8%.
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