Milky Mist IPO to close tomorrow; price band fixed at Rs 133-140

Milky Mist Dairy Foods’ Rs 1,553-crore initial public offering (IPO) will close for subscription on Thursday, August 13. The IPO was fully subscribed on Wednesday, the second day of three-day bidding, with strong demand from non-institutional and retail investors.

The company has fixed the price band at Rs 133-140 per equity share, with a face value of Rs 2 per share. 

Investors can bid for a minimum of 107 equity shares and in multiples of 107 thereafter. At the upper end of the price band, the minimum investment is Rs 14,980.

The Temasek-backed company is offering a Rs 13-per-share discount to eligible employees bidding in the employee reservation portion.

The IPO comprises a fresh issue of equity shares worth up to Rs 1,428 crore and an offer for sale (OFS) of shares worth up to Rs 125 crore. Under the OFS, Sathishkumar T, Chairman and Managing Director of Milky Mist, will sell up to Rs 75 crore worth of shares, while Anitha S, Co-Founder and Executive Director, will sell up to Rs 50 crore worth of shares.

Milky Mist had undertaken a pre-IPO placement comprising 543,789 equity shares and 25 million compulsorily convertible preference shares (CCPS) at Rs 139.76 apiece. The transaction aggregated to Rs 357 crore.

The equity shares offered through the IPO are proposed to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India, with the NSE serving as the designated stock exchange. JM Financial, Axis Capital and IIFL Capital Services are the book-running lead managers to the issue.

Founded in 1985 as a milk trading company, Milky Mist began paneer production years later and eventually launched the ‘Milky Mist’ brand in ‘97. The Tamil Nadu-based company now makes value-added dairy products like yoghurt, paneer, cheese, curd, butter, ghee, ice cream and UHT products, along with frozen, ready-to-eat and ready-to-cook foods.

Milky Mist’s IPO tells a more specific story: one that has less to do with milk, and more to do with what kind of dairy business India’s markets are now willing to back. The company’s pitch to investors rests on a different idea of dairy. 

Instead of betting on volumes of liquid milk, Milky Mist has built most of its portfolio around value-added products where margins are higher. Together, these contribute over half of its revenue. 

In effect, Milky Mist looks less like a traditional dairy and more like an FMCG company that happens to use milk as its raw material, while still selling some of it in tetra packs. The CapTable wrote about why Milky Mist’s IPO is less about milk, and more about value-added dairy.