DODLA DAIRY –

Q3 FY 24 results and concall highlights –

Revenues – 746 vs 675 cr ( up 12 pc )
Gross profits – 224 vs 171 ( margins @ 30 vs 25 pc )
EBITDA – 82 vs 53 cr ( margins @ 11 vs 8 pc )
PAT – 41 vs 35 cr ( margins @ 5.5 vs 5.2 pc )

Avg daily milk production @ 17.5 lakh liter per day ( LLPD ), up 36 pc YoY !!!

Revenues from value added products @ 186 cr, up 22 pc in Q3 – a huge positive and a key matrix to track. For 9M FY 24, sale from VAPs now at 28 pc of company sales

Curd sales grew by 12 pc YoY @ 132 cr
( included in VAP sales )

Company has expanded its cattle feed capacity by 6 times from 80 MTPD to 480 MTPD. Went live in Jan ( done via its subsidiary – Orgafeed )

Also commissioned a new Dairy plant in Kenya in Q2 FY 24 with a capacity of 1 lakh LPD

Intend to set up a Greenfield dairy plant in Maharashtra. Details shall be shared when the plan is finalised. May end up spending 150-200 cr of cash for the same. Company has > 200 cr of cash on books

Intend to double Orgafeed’s revenues to 200 cr by end of FY 25

The procurement prices in Q4 are holding up at similar levels as Q3 ( usually they are higher vs Q3 )

In Q4, the sales volumes are gradually picking up vs Q3

Company is procuring far higher Qty of milk/day vs its daily milk sales. This helps the company to convert excess milk to Skimmed Milk powder, Ghee and Butter. Earlier, company had to resort to being SMP and butter from third parties to sell it in the Mkt. This should further aid the margins

Confident of achieving 15 pc topline growth for FY 25 as clocking additional 100 cr revenues from animal feed and 100 cr from Kenya is a high probability event

Company aims to maintain advertisement spends at 0.5-0.7 pc of sales

Both Butter and SMP have a shelf live of 18 months under storage conditions. Therefore, its not risky to hold additional inventory of these items

Disc: holding, biased, not SEBI registered

Some highlights for me

Not cooperating with credit rating agencies, while they will need significant funds for working capital.
Due to not cooperating, we can see that interest costs are also high due to the high costing unsecured borrowings, these loans are all above 15% roi.

Tunneling they got a contract/order without any past history in the segment, shows their recognition and capability from the customer’s perspective.
Tunneling will bring a lot of stability to the biz, due to long term contracts,
although this would also need significant investments, especially in the beginning for mobilization etc.
This can be seen from the other expenses in 2023 Specialised Construction expenses- 59.3cr, which was nil in PY and is due to the tunneling segment.
Also it is higher margin.
Breakeven should take a lot of time in this segment.
Since this was the first project, they took it at a lesser margin, maybe to prove their mettle to the industry.

Cost plus basis mitigates rm risk, leads to stable margins.
Thus i believe to show growth they need continuous inflow of orders as there is not much opt lvg possible in the biz.

One interesting point is that they don’t need to be L1 to win orders.
Customers require quality, experience and lastly credentials, these giants/foreign funds wont trust a new upcoming player to handle their projects, they need a reliable firm.

Need to understand more about the airport potential, they had done a project in 2018 for the ahmedabad airport.

Need to understand the Repairs & Maintenance cost under other expenses- 104.5cr (PY- 56.4cr)

Performance guarantee and dlp has never been invoked, proves the quality of work.

Jan 27, 2023, right issue was announced, didnt go thru due to lack of interest from investors.

The promoters do not have nay lineage in the biz

how to rebalance my portfolio?

i m buying only stock which is at 52 week high stock.
I am making portfoilo of 15 stocks max investing equal amt. in all scripts.

1st i sort the stock which gave more returns more than benchmark( nse smallcap 250).
2nd step i sort the stock which is near to its 52 week high.
then select top 15 stock.

if the stock ranked below 30 than i removed from my PF.

Is this right way of rebalancing ?

ANY SUGGESTIONS

Recently I entered and exited that etf. Restriction is on new investments by fund houses. In etf case if there is liquidity it can change hands right.