Dindigul Farm Product Limited

Dindigul Farm Products Limited started in 2010, they are primarily engaged in processing of whole milk and skimmed milk to make dairy ingredients including, milk protein concentrates, skimmed milk powder, dairy whitener, whey protein concentrate, milk whey powder, casein, unbranded cream, butter and fat filled powders for infant milk formula. The processing facility is situated at Dindigul and is spread over 15 acres. The procurement operations consist of an average procurement of approximately 50,000 litres per day of milk directly from farmers and around 30,000-1,00,000 litres per day of whole milk from open market or third-party suppliers. As on the date of the RHP, they have built a network of more than 150 village collection centers, with direct access to more than 4,000 farmers and more than 50 dairy farms. They procure whole milk either directly from the farmers and through third party suppliers. The skimmed milk is procured by them from third party suppliers, majorly from the Group Company A R Dairy Food Private Limited. Company markets the products under the brand name ENNUTRICA, Activday and currently supply to a wide number of customers from different industries. For financial year 2022-23, they have sold products in more than 15 states domestically and 3 countries internationally. However, they aim to expand the international operations by looking to enter more ASEAN and European countries. They mainly supply products to Dairy Industry, Food Ingredients industry, nutrition industry, dairy industry, ice cream industry and baking industry. As per financial performance, Dindigul Farm Products Limited has posted total income / net profits of Rs 25.60 Cr / Rs 5.83 Cr (FY21), Rs 32.91 Cr / Rs 7.45 Cr (FY22), Rs 42.80 Cr / Rs 10.01 Cr (FY23) and Rs 26.39 Cr / Rs 8.40 Cr (upto Q3 FY24). So as per previous financials data, company has shown average results. Company has posted an average EPS of Rs 0.30 and average RoNW of -% for last three fiscals. Issue is priced at a P/BV of 23.58 as per NAV of 2.29 as on 23.12.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around (31.40), 25.09 and 16.81 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Beeline Capital Advisors Private Limited is associated with this SME IPO and handled 40 SME IPOs in last 3 year. From last 10 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, two trading below issue price and remaining are trading above issue price. ( As on 14.06.24 ) As per financials, Dindigul Farm Products Limited has shown improved results, RoNW is 149.49% (upto 23.12.23) and P/E is respectively (31.40), 25.09 and 16.81 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. Company is engaged in processing of whole milk and skimmed milk to make dairy ingredients, which is highly competitive and fragmented business segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

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