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Welcome to the 29th edition of Investor’s Edge! This issue takes a deep dive into the Q1FY26 performance of India’s leading dairy companies. We examine how value-added products, GST benefits, favorable monsoons, and a better flush season ahead are shaping the outlook for players like Dodla Dairy, Hatsun Agro, Heritage Foods, and Parag Milk. From revenue momentum to margin trends, we decode the drivers of growth and the challenges that lie ahead for the sector.
Record topline despite weather headwinds; EBITDA and PAT declined on margin pressure vs a strong base.
Management says - “Recently, we announced a capex of INR220 crores on expanding our ice cream facility. which is supposed to come up towards the end of this calendar year. The reason why we are making that investment is we are almost utilized -- fully utilized our existing capacity. So that capacity coming in and our ability to bring out new to the market products is what is going to drive a significant growth in the coming quarters.”
Management says - “The only difference is the value-added products decline compared to numbers. And here, I'm talking stand-alone numbers because the numbers you called out at 35% is on the consolidated number. But if I call out the valueadded products, excluding fats to our stand- alone number, it stands at about 36.1% compared to 37.5% in same quarter last year. And imagine that we are taking up our value-added product contribution 2% or 3% yearon-year. So ideally, we should have been at 39% or something. So that 3% swing is a big one, if I can tell. And so it's not just the direct -- the contributions that are driven by value-added products.”
Management says - “As you rightly said, the Vision 2030 is to be the most admired dairy nutrition company in the country. There are certain parameters that we have. Number one parameter is to do with the revenue growth. So that's mostly to do with the size and salience of the business as far as the country dynamic is concerned. It's our intention and continuing with our past communication. It's our intention to keep our growth in the double-digit space continuously over the next many years to come, not just next 5 years. And in the near to short term, we are looking at keeping it in the mid-teens. That's our ambition. We also have clearly laid out ambitions in terms of how we want to improve the farmer income in this period. There are certain metrics that we have drawn out as far as that is concerned internally. We are in the process of finalizing those numbers. There are certain metrics that we have drawn out in terms of consumer metrics. We are already number one in all our markets as far as consumer loyalty is concerned. In fact, we enjoy 19% consumer loyalty in our markets, and this is done through an independent market research agency as part of our routine quarterly brand health track, which is the highest among all South Indian brands in our markets.”
Management says- “As you know, that usually August and September are lean months. And usually flush availability starts to appear from September, October onwards, all indications because the monsoon actually has been a little too good for our liking. Actually, on the sales side, we would have wished it was a little less. But on the farm side, this is actually going to be impacting very positively in terms of supply of milk.”
Highest-ever Q1 revenue with steady profitability; slight EBITDA margin contraction YoY.
We continue to retain leadership position with Gowardhan ghee commanding 22% market share in branded cowghee segment and Go cheese holds 35% market share in the cheese category.
Management says - “Parag Milk Foods steadily evolved from a dairy led enterprise into a diverse FMCG company and now we are heading towards health and nutrition segment. This move was driven by our foresight into India’s shifting dietary patterns with protein becoming a key component in everyday nutrition.
Going forward, we are now forayed into a protein snack functional category where we have launched Whey protein bar and we're soon going to expand into products which are similar to that. We'll have newer flavors and into a snacking category of protein. So that's the plan for Whey protein moving forward.”
Management says- “The Indian sports nutrition Whey protein market is expanding. Currently it's valued at INR 1,600 crores and it's growing by 30% CAGR. Despite being cluttered with international brands, the market still lacks transparency and localized innovation. This is where Avvatar India, our home grown 100% vegetarian farm to shaker whey protein brand has carved its niche. our Whey protein is probably one of the fastest growing category that we have and we in fact have tailor made and created a Whey protein which is Avvatar and did a lot of research for almost five to six years on developing a product and we did a collab with an international scientist to get us the right product formula.”
Management says - “So of course the efficiency, as the scale improves, the efficiency is coming and which is reflecting in the overall EBITDA margin profile which is improving year-on-year. Our aspiration is also to grow it consistently, move to a double digit and then of course slowly enter into the teens category. So this is what our conscious efforts and as a company we are all targeted towards that. So for the next couple of years definitely you will see us moving up the ladder from a single digit or a high single digit to at least to a double digit level over the next couple of years. I would say maybe in 12 months or 18 months or 24 months. Not giving a specific time frame, but yes that is what our aspiration is to be.”
Highest-ever quarterly revenue, but margins moderated on softer summer VAP sales and Africa mix; PAT slightly lower YoY.
Management says - “Yes. Basically, butter milk, madam, last time, we have done around 45,000 liters. This time, it was only 32,000 liters. And even lassi also, it is around 15,000 and it was around 14,000. So basically, the major impact happened in the butter milk.
And curd, whatever, generally we get a growth, that growth has not come. We have little reduction. There is not much. It is around 5% -- 3% is a de-growth, like what we mentioned earlier in the curd.”
Management says - “Further, our greenfield expansion of INR280 crores in Maharashtra aimed at tie-up in the potential Solapur market is on track with the daily procurement in the region already reaching around 2.6 lakh liters per day. We are developing a fully integrated facility with a capacity of 10 lakhs.”
Management says- “OSAM thing basically for us, BVK will give you the more specifics of the improvement as we go forward. I think the East markets, for example, Bihar and Jharkhand are improving from the GDP point of view, it will take another couple of years as those states also grow for premiumization to have increasing of the gross margins as we go forward. But on the other side, we have the ability of further improvement and rationalization in the operating structure of cost, also which will give us an improvement. So, with both of these, I think it might not be dramatically higher than what we are operating in the Southern markets, but at least we'll try to bring it up to those levels as time goes by”
Management says- “FY '27. So that guidance number what we are saying is, in absolute terms we will grow between around 15% to 20%. That is what we are expecting it”
Steady growth with multi-quarter healthy gross margins; EBITDA and PAT improved modestly YoY
Management says- “GST-induced consumer affordability and rural income effects: “This will stimulate demand for rural spending capacity will increase substantially.”
Category uplift especially in ice cream; spillover to milk/curd on overall consumption buoyancy despite no direct GST cut”
Management says- “Half of it will go to consumer. Half of it will go to the farmer… This tax benefit will be shared between these two people.”
The Q1FY26 of India’s dairy sector highlights the varied paths players are treading as they balance topline growth with margin management. Dodla Dairy delivered record revenues, though profitability softened due to VAP mix and African operations, making it a steady “volume-plus-value” story. Hatsun Agro showcased consistencysteady revenue growth and resilient margins reinforce its position as a long-term compounding play built on scale and brand strength.
Heritage Foods, meanwhile, reflects a “margin recovery in waiting” phase: topline momentum was intact, but EBITDA and PAT took a hit, with the upcoming flush season and favorable monsoons likely to ease procurement costs ahead. Parag Milk Foods continued its steady climb with its premium product portfolio (cheese, whey, ghee), sustaining profitability and reinforcing its focus on value-added dairy products.
Sector-wide, GST benefits on VAP, higher monsoons, and an anticipated better flush season create a supportive backdrop. Yet the divergence lies in executio —between those prioritizing premiumization and those betting on scale. For investors, the critical question is not just which dairy grows volumes, but which can consistently translate sectoral tailwinds into sustainable margins and differentiated product leadership.
Disclaimer - This blog is only for educational purpose and not a buy/sell recommendation. Please do your own research before making any investment decision
All major indices—from the Nifty 50 to the Nifty Microcap 250—posted strong one-week and one-month gains, with the smaller-cap indices (Smallcap and Microcap) leading the charge (up 7.7% and 8.5% in one week, respectively).
Understanding market cycles and spotting opportunities before the next big move.
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