Allied Blenders and Distillers IPO Opens June 25 to Raise Rs1500 Crore

Allied Blenders and Distillers IPO

Allied Blenders and Distillers IPO: A Comprehensive Look

Allied Blenders and Distillers Limited (ABD), the maker of the iconic Officer’s Choice Whiskey, is set to launch its initial public offering (IPO) on June 25th, 2024.

This presents a potential investment opportunity for those interested in the Indian alcoholic beverage market, particularly the dominant Indian-made foreign liquor (IMFL) segment. Let’s delve deeper into the details of the IPO, the company’s background, and factors to consider before making an investment decision.

IPO Details and Structure

The ABD IPO aims to raise Rs 1,500 crore through a combination of fresh issue and Offer for Sale (OFS). The fresh issue of Rs 1,000 crore will infuse new capital into the company, potentially fueling growth initiatives.

The remaining Rs 500 crore will come through the OFS, where existing shareholders, including promoters Bina Kishore Chhabria and Resham Chhabria Jitendra Hemdev, will offload shares worth Rs 375 crore and Rs 125 crore respectively. A small portion of the issue (Rs 3 crore) is reserved for employee subscription.

The subscription window for the IPO will be open from June 25th to June 27th, 2024. However, anchor investors will have a one-day early access on June 24th.

The price band for the IPO is yet to be announced, but it’s expected to be revealed on June 20th, providing crucial information for potential investors.

Fund Allocation and Growth Strategy

The company plans to utilize the proceeds from the IPO strategically. A significant portion (Rs 720 crore) will be directed towards debt repayment, potentially improving the company’s financial health and reducing its interest burden.

The remaining amount will be used for general corporate purposes, which could encompass various initiatives like brand building, expanding distribution networks, or exploring new product categories.

A Look at Allied Blenders and Distillers

ABD is a prominent player in the Indian IMFL industry, boasting a pan-India distribution network. They have established themselves as a household name with a diverse product portfolio encompassing whisky, brandy, rum, and vodka.

Their flagship brand, Officer’s Choice, enjoys a strong position in the mass premium whisky segment. As of December 2023, their portfolio comprised 16 major IMFL brands, catering to a wide range of consumer preferences.

The company’s market share in the Indian whisky market is estimated at a significant 11.8% (FY23), highlighting their strong brand presence and consumer base.

This dominance is reflected in their revenue figures, with whisky contributing over 96% to their revenue stream in both FY23 and the first nine months of FY24.

Financial Performance: A Snapshot

ABD’s financial performance paints a picture of steady growth. In FY23, they reported a net profit of Rs 1.6 crore, reflecting an 8.5% increase compared to the previous year.

Revenue (excluding excise duty) also witnessed a positive trajectory, growing by 17.2% to reach Rs 3,146.6 crore during the same period.

The momentum appears to be continuing in the current fiscal year as well. For the nine-month period ending December 2023, net profit surged by 46.8% to Rs 4.2 crore, while revenue witnessed a growth of 7.8% at Rs 2,560.3 crore.

Factors to Consider Before Investing

While the ABD IPO presents a potential investment opportunity, careful consideration of various factors is crucial before making a decision. Here are some key aspects to explore:

• Industry Analysis: Research the overall health and growth prospects of the Indian IMFL market. Factors like regulatory changes, consumer preferences, and competition from other players can impact the company’s performance.
• Company Financials: A deeper dive into ABD’s financials beyond the provided snapshot is recommended. This could involve analyzing their debt levels, profit margins, and cash flow to assess their financial stability and future growth potential.
• Management Expertise: Evaluate the experience and track record of the company’s management team. Their ability to navigate market challenges, capitalize on opportunities, and execute strategic plans will significantly influence the company’s success.
• Valuation: Once the price band is announced, compare it to the company’s financials and industry benchmarks to assess whether the IPO is priced attractively.

Final Remarks

The upcoming Allied Blenders and Distillers IPO offers a chance to invest in a well established player within the Indian IMFL industry.

However, a well-informed decision requires thorough research and analysis. Here are some additional points to consider:

• Brand Strength: ABD’s brand portfolio, particularly Officer’s Choice, holds a strong position in the market. Analyze brand recognition, consumer loyalty, and marketing strategies to understand their brand’s competitive edge.
• Future Product Launches: ABD’s plans for new product launches or forays into different beverage categories could influence their future growth potential.
• Regulatory Environment: The alcoholic beverage industry is subject to government regulations. Stay updated on any potential changes in excise duty, licensing policies, or advertising restrictions that could impact the company’s operations.

Due Diligence is Key

By conducting thorough due diligence, you can make an informed investment decision aligned with your financial goals and risk tolerance. Here are some resources that can aid your research:

• ABD IPO DRHP: The company’s Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI) will provide a detailed picture of its financials, business plans, and risk factors.
• Financial News and Analysis: Reputable financial publications and analyst reports can offer valuable insights into the company’s performance and the IMFL industry.
• Industry Reports: Reports from market research firms can provide data and analysis on the Indian IMFL market size, growth trends, and future outlook.

Remember:

Investing in the stock market involves inherent risks. The IPO price may not guarantee future returns, and the company’s performance can be influenced by various internal and external factors.

Seek Professional Advice

Consulting a qualified financial advisor can be beneficial, especially for those new to stock market investing. They can help you assess your risk profile, investment goals, and guide you through the process of analyzing the ABD IPO and making an informed decision.

By carefully considering all the available information and conducting proper research, you can determine if the Allied Blenders and Distillers IPO aligns with your investment strategy.