The initial public offering (IPO) of Allied Blenders and Distillers opens for bidding on Tuesday, June 25 and can be subscribed till Thursday, June 27. The company is offering its shares in the fixed price band of Rs 267-281 apiece. Investors can apply for a minimum of 53 equity shares and its multiples thereafter.
Incorporated in 2008, Allied Blenders and Distillers is an Indian-made foreign liquor (IMFL) company. The company offers five Indian-made foreign liquor categories: whisky, brandy, rum, vodka and gin. In addition, they sell packaged drinking water under the Officer's Choice, Officer's Choice Blue, and Sterling Reserve brands.
The Rs 1,500 crore issue by Allied Blenders and Distillers include as a fresh share sale of Rs 1,000 crore and an offer-for-sale (OFS) of Rs 500 crore by its promoters- Bina Kishore Chhabria and Resham Chhabria Jeetendra Hemdev. It has reserved shares worth Rs 3 crore for the eligible employees, who will get a discount of Rs 26 apiece.
Allied Blenders and Distillers raised Rs 449.1 crore from anchor investors on Monday as it finalised allocation of 1,59,82,206 shares at a price of Rs 281 apiece. Goldman Sachs, Integrated Core Strategies, Societe Generale, Authum Investment, Winro Commercial, MAIQ Growth, LC Radiance Fund VCC and several mutual funds participated in the anchor book.
The net proceeds from the fresh issue shall be used towards prepayment or scheduled repayment of a portion of certain outstanding borrowings availed by the company and general corporate purposes. Proceeds from the OFS shall go to the selling shareholders of the company.
Allied Blenders and Distillers' products were exported to 22 international markets, including the Middle East, North and South America, Africa, Asia, and Europe as of December 31, 2021. The Officer's Choice Whisky was introduced in 1988 as the company's foray into the mass premium whisky market. It is one of the most-selling whisky brands in the world.
Allied Blenders and Distillers owns and operates a distillery in Rangapur, Telangana, which is spread over 74.95 acres and has a built-up area of over 25,000 square meters. The company's in-house distillation capacity of extra neutral alcohol (ENA) is 54.75 million litres annually. The company also have extensive bottling capabilities across India.
Allied Blenders and Distillers reported a net profit of Rs 4.23 crore with a revenue of Rs 5,914.98 crore for the nine-months ended on December 31, 2023. The company's net profit came in at Rs 1.60 crore with a revenue of Rs 7,116.75 crore for the financial year 2022-23.
Allied Blender and Distillers has reserved 50 per cent of the issue for the qualified institutional bidders (QIBs), while non-institutional investors have 15 per cent of the net offer. Remaining 35 per cent of the net offer shall be allocated towards retail investors.
Nuvama Wealth Management, ICICI Securities and ITI Capital are the book running lead managers of the Allied Blenders IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE with July 2, Tuesday as the tentative date of debut. Here's what a host of brokerage firms say about the IPO of Allied Blenders:
Anand Rathi Research Rating: Subscribe for long term Allied Blenders has built a well-recognized product portfolio, evolving from a single-brand entity to a multi-product, multi-brand firm with a presence across various categories and segments of the IMFL industry in India. It plans to use the majority of its proceeds to pay down debt, which will lower finance costs and boost profit margins, said Anand Rathi Research.
"The company's P/E ratio is 1,405 times its FY24 annualized earnings, with a market capitalization of Rs 7,859.6 million after the issuance of equity shares and a market cap-to-sales ratio of 0.99 times its FY24 annualized earnings. Even though the issue is fully priced in near term, we believe the company has promising long-term business prospects," it added with a 'subscribe' rating.
Swastika Investmart Rating: Avoid Allied Blenders and Distillers boasts a strong brand presence, a diverse product portfolio, and an extensive pan-India distribution network, its suitability for investment requires careful consideration. The company's financial performance has been volatile, characterized by low-profit margins and high debt levels, said Swastika Investmart.
"The Indian made foreign liquor (IMFL) industry faces intensifying competition, potential tax hikes, and a highly regulated environment. Additionally, the current IPO valuation appears exceptionally high, with a P/E of 4,014 times. Given the aforementioned risks and the high valuation, we recommend avoiding the Allied Blenders and Distillers IPO," it added.
StoxBox Rating: Subscribe with Caution Various factors such as lower per capita consumption of alcohol and positive demographic factors which adds more than 13 million people each year to the population eligible for drinking has made the country an attractive market for alcoholic beverages, said StoxBox.
"On the valuation front, the issue looks expensive on the price-to-earnings multiple front and ahead of its peer set. However, looking at the alcohol industry dynamics and the company's strong positioning in the IMFL landscape, we would advise high-risk investors to 'subscribe' to the issue for listing gains," it said.
SBICap Securities Rating: Subscribe Allied Blenders is valued at an annualized FY24 EV/Ebitda multiple of 31.3 times based on the post-issue capital on upper price band. The company is one of the largest players in the IMFL market with its flagship brand Officer’s Choice holding 20.9 per cent market share in the mass premium segment as of FY23, said SBICap Securities.
"The company is expected to reduce its total debt from Rs 798 crore as of December 2023 to Rs 80 crore from the proceeds of the issue which will help reduce interest cost to a great extent thereby boosting profits and return ratios. We recommend investors to 'subscribe' to the issue for the long term," it said.
Sushil Finance Rating: Subscribe Allied Blenders is the largest Indian-owned Indian-made foreign liquor company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22. They entered the premium and semi-premium whisky segments and going forward they intend to continue to introduce products in the premium, semi-premium and deluxe segments, said Sushil Finance.
"More than 90 per cent of the revenue comes from whisky products. There are some established players in the market thus making the environment competitive. Any changes in the government policies, regulatory reforms in regard to alcohol markets may affect the operations of the company," it added with a 'neutral' view on the issue citing risks and rich valuations.
Prabhudas Lilladher Rating: Subscribe The IPO has been valued below leading IMFL players, which is rightly so on EV/Ebitda, given the higher mass volumes in ABD. Also, if we adjust the PAT based on the debt repayment from the IPO proceedings, the PE ratio falls to 56-59 levels. The company is planning to focus on the premium segment which will lead to margin expansion, said Prabhudas Lilladher.
"As per the management, the company can also take a JV route to develop its premiumisation journey with International players. Given the expected long growth runway for liquor players, dominance of whiskey in liquor segment, limited pan-India players in the segment and growing premiumization play in the economy, we assign 'subscribe' rating to the IPO," it said.
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