FREE Account Opening + No Clearing Fees

ICL Organic Dairy BSE SME IPO review (Avoid)

Review By Dilip Davda on January 29, 2020

•    IODPL is a local player in the dairy farming business
•    Financial performance has no match with the asking price.
•    Its high working capital intensive biz with a cut throat competition.
•    Lead Manager has poor track records.

ICL Organic Dairy Products Ltd. (IODPL), was till 2019 engaged in dairy farming with the main object to produce and extract milk from cow and distributing the same raw milk extracted from the cow and supplying it to Sweet Shops, Retailers, different establishments and households. ICL trade mark is owned by the group company. According to company management, it is in working capital intensive business and has not taken any loan so far from banks for the said purpose.

ISSUE DETAILS/CAPITAL HISTORY:To part finance its plans for working capital needs (Rs. 3.48 cr.) and general corpus fund needs (Rs. 0.25 cr.), IODPL is coming out with a maiden IPO of 2040000 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 4.08 cr. The issue opens for subscription on 31.01.20 and will close on 04.02.20. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. This issue is solely lead managed by Finshore Management Services Ltd while Cameo Corporate Services Ltd. is the registrar to the issue. Beeline Broking Ltd. is the market maker for this issue. Post allotment, shares will be listed on BSE SME. The issue constitutes 33.99% of the post issue paid-up equity capital. The company is spending Rs. 0.35 cr. for this issue process.

Having issued initial equity at par, IODPL converted/issued further equity shares at a fix price of Rs. 20 per share between March 2019 and November 2019. It has also issued bonus shares in the ratio of 1 share for every 2 shares held in July 2019. The average cost of acquisition of shares by the promoters is Rs. 15.34 and Rs. 17.23 per share.

Post issue IODPL's current paid-up equity capital of Rs. 3.96 cr. will stand enhanced to Rs. 6.00 cr. The company is mulling market cap of Rs. 12.00 cr. with this issue.

For the last three fiscals, IODPL has posted turnover/net profits of Rs. 2.53 cr. / Rs. 0.05 cr. (FY17), Rs. 12.07 cr. / Rs. 0.35 cr. (FY18) and Rs. 15.73 cr. / Rs. 0.28 cr. (FY19). For the first four months ended on 31.07.19 of FY20, it has earned a net profit of Rs. 0.05 cr. on a turnover of Rs. 2.23 cr.

For the last three fiscals, IODPL has posted an average EPS of Rs. 85.30 and an average RoNW of 39.25%. This data is based on old equity base as on 31.07.19. The issue is priced at a P/BV of 1.12 on the basis of its NAV of Rs. 17.79 as on 31.07.19 and at a P/BV of 1.03 based on post issue NAV of Rs. 19.38.

While its top line has shown growth, its bottom line witnessed inconsistency. It is in the high volume/low margin business segment with tough competition from many big players. This industry is highly fragmented.
If we annualize the latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 80. Thus the issue is aggressively priced against industry average of 29.5.

As per offer documents, IODPL has shown Prabhat Dairy, Heritage Foods, Parag Milk and Umang Dairy as its listed peers. They are currently trading at a P/Es of around 134.68, 21.64, 10.54 and 16.91 (as on 29.01.20). However, they are not strictly comparable.

On merchant banker's front, this is the 15th mandate from its stable in the last three fiscals (including the ongoing). Out of the last 10 listings, three issues opened at a discount, one at par and the rest with a premium ranging from 1.63% to 20.67% on the day of listings. IPO of Alumilite Arch was withdrawn post-closure of the issue. Thus it has poor track records.

Conclusion / Investment Strategy

IODPL has shown inconsistency in bottom lines despite growing top lines. The dairy business is highly fragmented. The company has tough competitions from big players with an established business. The issue appears aggressively priced. IODPL's financial performance has no match with the asking price. There is no harm in giving this issue a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on January 29, 2020

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).


  1. 1. Why ICL Dairy IPO?

    The initial public offer (IPO) of ICL Organic Dairy Products Ltd offers an early investment opportunity in ICL Organic Dairy Products Ltd. A stock market investor can buy ICL Dairy IPO shares by applying in IPO before ICL Organic Dairy Products Ltd shares get listed at the stock exchanges. An investor could invest in ICL Dairy IPO for short term listing gain or a long term.

  2. 2. How is ICL Dairy IPO?

    Read the ICL Dairy IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. ICL Dairy IPO what should investors do?

    ICL Dairy IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the ICL Dairy IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is ICL Dairy IPO good?

    Our recommendation for ICL Dairy IPO is to avoid.

  5. 5. Is ICL Dairy IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the ICL Dairy IPO.

  6. 6. When will ICL Dairy IPO allotment status?

    The ICL Dairy IPO allotment status will be available on or around February 11, 2020. The allotted shares will be credited in demat account by February 13, 2020. Visit ICL Dairy IPO allotment status to check.

  7. 7. When will ICL Dairy IPO list?

    The ICL Dairy IPO will list on Monday, February 17, 2020, at BSE SME.