Milky Mist nears full IPO subscription on strong retail demand
Strong retail bidding has pushed the initial public offering of Indian dairy producer Milky Mist near full subscription, highlighting robust investor appetite for value-added consumer goods despite a premium valuation.
The initial public offering of Milky Mist Dairy Food has neared full subscription on its second day of trading, driven by heavy demand from individual investors. Bids covered 79 per cent of the 64.8 million shares on offer by the close of the first day, with retail investors alone subscribing to 96 per cent of their allocated portion.
Demand from qualified institutional buyers remained comparatively subdued at 39 per cent, though non-institutional investors subscribed to 92 per cent of their quota. The strong retail interest follows a successful anchor investment round, which raised ₹465.30 crore at the upper end of the ₹140 price band earlier in the week.
The listing, which aims to raise up to ₹1,553 crore through a combination of fresh equity and an offer for sale, is set to be the largest public issue by an Indian dairy company. The company commands a post-issue valuation of approximately ₹10,778 crore, pricing its shares at roughly 85 times its projected earnings for the fiscal year ending in 2026.
This premium multiple significantly exceeds the dairy sector average of 52.5 times, a gap brokerages attribute to the company’s focus on high-margin, value-added products rather than traditional liquid milk. Unlike listed peers such as Hatsun Agro Product and Heritage, Milky Mist operates with consumer goods margins and reported a 33.6 per cent revenue compound annual growth rate.
Profit after tax for the fiscal year nearly tripled to ₹127.01 crore on revenues of ₹3,145.01 crore, while return on net worth increased significantly to 33.60 per cent. The improved profitability metrics have prompted brokerages like Sushil Financial Services to issue subscribe ratings for the public issue.
Proceeds from the fresh issue will be directed toward debt reduction, expanding manufacturing capacity in Tamil Nadu, and building out cold-chain infrastructure. The funds will also finance new plants for whey protein concentrate, yogurt and cream cheese, alongside retail assets like visi coolers and ice cream freezers.
This pricing strategy was heavily validated in May when Temasek, via its Jongsong Investments subsidiary, injected ₹482 crore into the company ahead of the public listing. Unlisted market indicators reflect this positive sentiment, with the grey market premium stabilising around ₹22.50. This implies a potential 16 per cent listing gain over the ₹140 issue price when the IPO concludes its bidding period on Thursday.
