Dindigul Farm (EnNutrica) IPO: Open Date, Price, Lot Size & Subscription

Dindigul Farm Limited, operating under the brand name EnNutrica, has announced its Initial Public Offering (IPO) to raise approximately ₹34.83 crores. This IPO is a significant event for the company and the dairy industry, marking a new chapter in its growth and expansion.

This article provides a comprehensive overview of the EnNutrica IPO, including details about the company, the IPO specifics, financial performance, and the broader industry context.

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Company Overview of Dindigul Farm (EnNutrica) IPO.

History and Background.

Dindigul Farm Limited, established in 2010, is primarily engaged in processing whole milk and skimmed milk to produce a variety of dairy ingredients. These include 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 company’s manufacturing facility is located in Dindigul, Tamil Nadu, and spans over 15 acres.

Product Portfolio.

The company’s product portfolio is diverse, catering to various segments of the dairy industry. Key products include:

• Milk Protein Concentrates: Used in nutritional products and infant formulas.
• Skimmed Milk Powder: A versatile ingredient in baking and confectionery.
• Dairy Whitener: Commonly used in tea and coffee.
• Whey Protein Concentrate: Popular in sports nutrition and health supplements.
• Casein and Caseinates: Used in cheese production and as a protein supplement.
• Unbranded Cream and Butter: Essential ingredients in the food industry.
• Fat-Filled Powders: Used in infant milk formulas and other nutritional products.

Market Reach.

Dindigul Farm Limited has a robust procurement network, sourcing approximately 50,000 liters of milk daily from farmers and an additional 30,000 to 100,000 liters from the open market or third-party suppliers. The company has established over 150 village collection centers, providing direct access to more than 4,000 farmers and over 50 dairy farms.

The company’s products are marketed under the brand names EnNutrica and Activday. In the financial year 2022-23, the company sold products across more than 15 states in India and three countries internationally. The company aims to expand its international footprint into more ASEAN and European countries.

Dindigul Farm (EnNutrica) IPO Details.

Key Dates.

• IPO Open Date: June 20, 2024
• IPO Close Date: June 24, 2024
• Basis of Allotment: June 25, 2024
• Refunds: June 26, 2024
• Credit to Demat Account: June 26, 2024
• IPO Listing Date: June 27, 2024

Issue Size and Price Band.

The EnNutrica IPO is a book-built issue with a total size of ₹34.83 crores, comprising 64.5 lakh equity shares. The price band for the IPO is set at ₹51 to ₹54 per equity share, with a face value of ₹10 per share.

Market Lot and Investment.

The minimum market lot for the IPO is 2,000 shares, requiring a minimum investment of ₹108,000. Retail investors can apply for a maximum of one lot, while high net-worth individuals (HNIs) can apply for a minimum of two lots.

Reservation and Allocation.

The IPO has a reservation structure as follows:

• Qualified Institutional Buyers (QIBs): 50% of the net offer
• Non-Institutional Investors (NIIs): 15% of the net offer
• Retail Individual Investors (RIIs): 35% of the net offer

Financial Performance.

Revenue and Profitability.

Dindigul Farm Limited has shown significant growth in revenue and profitability over the past few years. The company’s financial performance is summarized below:

• FY 2021: Revenue of ₹18.41 crores, net loss of ₹4.62 crores
• FY 2022: Revenue of ₹28.45 crores, net loss of ₹5.90 crores
• FY 2023: Revenue of ₹81.99 crores, net profit of ₹5.17 crores
• 9M FY24 (up to December 2023): Revenue of ₹68.74 crores, net profit of ₹5.88 crores

Key Financial Ratios.

• Earnings Per Share (EPS): Improved from ₹(2.90) in FY 2022 to ₹4.09 in FY 2023
• Return on Net Worth (RoNW): 149.49% in FY 2023
• Debt-Equity Ratio: Increased due to higher reliance on debt financing for expansion

Objectives of the Dindigul Farm (EnNutrica) IPO.

The net proceeds from the IPO will be used for the following purposes:

1. Funding Capital Expenditure: To enhance production capacity and improve operational efficiency.
2. Working Capital Requirements: To support day-to-day operations and manage cash flow.
3. General Corporate Purposes: To meet miscellaneous corporate expenses and strategic initiatives.

Industry Overview.

Dairy Industry in India.

India is the largest milk producer in the world, with an annual production of 221.06 million tonnes in 2021-22, up from 209.96 million tonnes in 2020-21. The dairy industry has been growing at a compound annual growth rate (CAGR) of around 6.4% over the past decade. The organized dairy sector, which includes companies like Dindigul Farm Limited, accounts for about 30% of the total milk production in the country.

Market Trends.

The Indian dairy market is expected to continue its growth trajectory, driven by increasing demand for dairy products, rising disposable incomes, and changing dietary preferences. Key trends in the industry include:

• Rising Demand for Value-Added Products: There is a growing demand for value-added dairy products such as cheese, yogurt, and flavored milk.
• Health and Wellness: Consumers are increasingly seeking dairy products with health benefits, such as protein-rich and low-fat options.
• Technological Advancements: The adoption of advanced technologies in dairy processing and quality control is enhancing product quality and shelf life.
• Export Opportunities: Indian dairy companies are exploring export opportunities in ASEAN and European markets, leveraging India’s competitive advantage in milk production.

SWOT Analysis.

Strengths.

• Diverse Product Portfolio: Dindigul Farm Limited offers a wide range of dairy products catering to various segments of the market.
• Strong Procurement Network: The company has a robust network of village collection centers and direct access to farmers, ensuring a steady supply of high-quality milk.
• Quality Control: The company’s processing facility adheres to global standards such as FSSC 22000, ensuring high product quality and safety.
• Market Reach: The company has a strong presence in the domestic market and is expanding its international footprint.

Weaknesses.

• High Debt Levels: The company’s reliance on debt financing for expansion has increased its debt-equity ratio, posing financial risks.
• Product Contamination Risks: Despite stringent quality controls, the perishable nature of milk poses contamination risks, which could impact sales and reputation.
• Limited Experience of Corporate Promoter: The corporate promoter, Indrayani Biotech Limited, has limited experience in the dairy industry, which could affect strategic decision-making.

Opportunities.

• Growing Dairy Market: The expanding dairy market in India and abroad presents significant growth opportunities for the company.
• Value-Added Products: Increasing demand for value-added dairy products offers opportunities for product diversification and higher margins.
• Export Potential: The company’s plans to expand into ASEAN and European markets could drive revenue growth and enhance brand recognition.

Threats.

• Regulatory Risks: The dairy industry is subject to stringent regulations, and any non-compliance could result in penalties and operational disruptions.
• Competition: The company faces competition from both organized and unorganized players in the dairy industry, which could impact market share and profitability.
• Supply Chain Disruptions: Any disruptions in the supply chain, such as fluctuations in milk supply or transportation issues, could affect production and sales.

Summary.

The EnNutrica IPO by Dindigul Farm Limited represents a significant milestone for the company as it seeks to raise funds for expansion and operational needs. With a diverse product portfolio, strong procurement network, and adherence to quality standards, the company is well-positioned to capitalize on the growing opportunities in the dairy industry. However, potential investors should consider the company’s high debt levels, product contamination risks, and competitive landscape before making investment decisions.

The IPO opens on June 20, 2024, and closes on June 24, 2024, with the listing date set for June 27, 2024. The price band for the IPO is ₹51 to ₹54 per equity share, and the minimum investment required is ₹108,000 for 2,000 shares. The net proceeds from the IPO will be used for funding capital expenditure, working capital requirements, and general corporate purposes.

As the dairy industry continues to grow, Dindigul Farm Limited’s strategic initiatives and expansion plans could drive significant value for shareholders. Investors looking for exposure to the dairy sector may find the EnNutrica IPO an attractive opportunity, provided they carefully assess the associated risks and rewards.

C.K. Gupta

Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.