Dodla Dairy - Model Recovery In Margins In H2 FY24; Milk Procurement Prices Near Peak Levels: ICICI Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .ICICI Securities Report.We believe milk procurement prices are closer to the peak levels and may correct post commencement of flush season in H2 CY23. We model the Ebitda margins of Dodla Dairy Ltd. to decline 50-100 basis points YoY in H1 CY23. However, we model strong recovery in margins in H2 FY24 led by price hikes and likely correction in milk procurement prices. With stock price correction of 25% over past 12 months, we believe the current valuations (12 times FY25E) offer attractive risk reward to long term shareholders. We remain positive on Dodla due to its competitive advantages and strong growth opportunity in its core region of South India. The volatility in margins is a cyclical factor. While it impacts the near term earnings, we believe there is negligible impact on discounted cash flow valuations. We would also like to point that the return on capital employed is higher than cost of capital even when margins are at cyclically lowest level. It indicates economic value added generation even at bottom of the cycle..Click on the attachment to read the full report:.Dodla Dairy - Cyclical Headwinds Creating Deep Value In A Steady Compounder: Systematix Initiates Coverage.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Dodla Dairy - Model Recovery In Margins In H2 FY24; Milk Procurement Prices Near Peak Levels: ICICI Securities

Higher milk procurement prices to impact near term earnings.

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