Tasty Dairy BSE SME IPO Review (May apply)

Review By Dilip Davda on Feb 4, 2018

Tasty Dairy Specialities Ltd. (TDSL) is currently involved in processing milk, along with bulk milk procurement and handling during season time which primarily caters to bulk and marquee institutional customers. Company is further involved in value added milk products like Skimmed Milk Powder, Butter, Ghee, Dairy Whitener, Concentrated Milk etc. This is providing the company a firm ground to enter into retail segment. Currently, TDSL is situated in Uttar Pradesh, which is one of the largest milk producers State in India. Its manufacturing unit at D-3, UPSIDC Industrial Area, Jainpur, Kanpur Dehat, Uttar Pradesh falls in the richest milk belt of U.P. The Company with the existing plant and machinery is capable of handling approximately 5,00,000 litres of raw milk which comprises of 1,60,000 litres of milk packaging, 20,000 litres of buttermilk packaging, 2,20,000 Litres for making Skimmed Milk Powder and Ghee and 2,00,000 litres of bulk milk processing. These facilities are not only in close proximity to its milk procurement region but also to target market. Over the two decades, the Company invested consistently in proactive capacity creation, stretching its gearing to a peak. Company’s products are sold under the brand names like SHIKHAR, UJJWAL, Verifresh and CIMA.

To part finance its working capital and general corpus fund needs, TDSL is coming out with a maiden IPO of 5430000 equity shares of Rs. 10 each at a fixed price of Rs. 45 per share to mobilize Rs. 24.44 crore. Issue opens for subscription on 07.02.18 and will close on 12.02.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Mark Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.58% of the post issue paid up capital of the company. Average cost of acquisitions of shares by the promoters is Rs. 0.067 per share. Its entire initial equity is issued at par. It has also issued bonus shares in the ratio of 14 for 1 in February 2007, 1 for 1 in March 2010, 2 for 1 in November 2012 and 2 for 3 in September 2017. Post issue, its current paid up equity capital of Rs. 15.00 cr. will stand enhanced to Rs. 20.43 cr.

On performance front, TDSL has posted turnover/net profits of Rs. 251.90 cr. / Rs. 5.43 cr. (FY14), Rs. 307.95 cr. / Rs. 4.48 cr. (FY15), Rs. 334.88 cr. / Rs. 4.63 cr. (FY16) and Rs. 239.00 cr. / Rs. 4.52 cr.(FY17). Though its top line marked growth from FY 14 to FY 16, it marked declined in bottom lines. For FY17 it suffered a setback in top line as well, but surprising posted better net. For first half of the current fiscal, it has earned net profit of Rs. 2.43 cr. on a turnover of Rs.137.40 cr. For last three fiscals it has posted an average EPS of Rs. 2.51 and average RoNW of 6.56% on an equity base of Rs. 9 crore. However, company has posted an average EPS of Rs. 1.51 on post bonus equity as on 30.09.17. Issue is priced at a P/BV of 1.83 on the basis of its NAV of Rs. 24.57 as on 30.09.17 and at a P/BV of 1.5 on the basis of its post issue NAV of Rs. 30. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 19 against listed peers trading at Kwality (16), Prabhat Dairy (76) and Hatsun Agro (96). Issue appears fully priced based on its performance parameters. Group’s three companies are also dealing in similar business.

On merchant banker’s front, this is the 2nd mandate from its stable and the only one listing took place so far i.e. Madhya Pradesh Media opened around 6% premium to offer price.


Conclusion / Investment Strategy

Although dairy business is having bright prospects going ahead, this company is likely to face stiff competition from other mega players. Its inconsistent performance raises concern. Considering fully priced offer, one may consider it for long term investment.

Review By Dilip Davda on Feb 4, 2018

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. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. 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 own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


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.

Email: dilip_davda@rediffmail.com

Tasty Dairy Specialities IPO FAQs

  1. 1. Why Tasty Dairy Specialities IPO?

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

  2. 2. How is Tasty Dairy Specialities IPO?

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

  3. 3. Tasty Dairy Specialities IPO what should investors do?

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

  4. 4. Is Tasty Dairy Specialities IPO good?

    Our recommendation for Tasty Dairy Specialities IPO is to subscribe for long term.

  5. 5. Is Tasty Dairy Specialities IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Tasty Dairy Specialities IPO.

  6. 6. When will Tasty Dairy Specialities IPO allotment status?

    The Tasty Dairy Specialities IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Tasty Dairy Specialities IPO allotment status to check.

  7. 7. When will Tasty Dairy Specialities IPO list?

    The Tasty Dairy Specialities IPO will list on Wednesday, February 21, 2018, at BSE SME.








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