Prabhat Dairy

The company’s IPO evoked an extremely poor response, it managed to fill in barely 28%, due to which it had to extend the date and reduce the offer price too. The offer price was revised downwards to Rs.115 from Rs.126 /share for all except retail investors, whose price came to Rs.110/share. Even in our New Issue Analysis of this company, we had stated that dad the pricing been in the range of Rs. 120-125 per share, it would have been attractive and that is what happened.

Prabhat Dairy sells cow milk and dairy products, under brands Prabhat, Milk Magic and Flava, through its 350 distributors across western India. The company did not a very encouraging Q2FY16 performance with consolidated net profit coming down 25% at Rs.6 crore. The higher tax outgo of Rs.3 crore v/s Rs.75 lakh in previous Q2 pushed down the bottomline. Interestingly, in October, even after this increased tax outgo, the company’s office premises and houses of EDs were searched by IT officials. The equity capital of Rs.98 crore is huge to say the least.

The company had collected Rs.300 crore from the market of which Rs.185 crore was used towards repayment of loans – current Q2 debt has shown a decline of 63%. That was the main purpose of the IPO.