Dodla Dairy — Q1 FY26 earnings call

Call held 21 Jul 2025

Management summary

Dodla Dairy reported a strong top-line performance in Q1 FY26, with revenue crossing ₹1,000 crores for the first time, driven by robust growth in Africa and Orgafeed segments. However, unseasonal rains and higher procurement costs led to margin pressure and a decline in high-margin VAP sales. The company is strategically expanding through the OSAM acquisition and Maharashtra greenfield project, while expecting margin improvement in Q2 FY26 due to lower procurement prices.

Highlights

  • Revenue of ₹1,007 crores, up 10.5% YoY, marking the first time crossing the ₹1,000 crore mark.

  • Orgafeed business demonstrated strong growth with revenue up 29.4% and EBITDA up 84.4%, achieving an EBITDA margin of 17.6%.

  • Africa business showed healthy revenue growth of 26.9% YoY, with milk volume increasing 19% YoY to 1.6 lakh liters.

  • Significant reduction in inventory: butter at ₹9.7 crores (from ₹155 crores last year) and SMP at ₹17 crores (from ₹144 crores last year).

  • Greenfield expansion of ₹280 crores in Maharashtra is on track, with daily procurement already reaching 2.6 lakh liters per day.

Concerns

  • EBITDA margin for Q1 FY26 was 8.2% and PAT margin was 6.2%, indicating margin pressure.

  • Unseasonal early rains dampened summer demand for high-margin value-added products (VAP) like curd, flavored milk, and ice cream, leading to a 3.2% degrowth in curd sales.

  • Procurement prices grew faster than milk realization prices in Q1 FY26, contributing to margin pressure.

  • The new Kenya plant's EBITDA margin was lower at 13% due to strategic pricing to capture the mid-market and increased procurement prices.

Key financials

  1. Revenue ₹1,007 Cr +10.5%YoY
  2. EBITDA Margin 8.2%
  3. PAT Margin 6.2%
  4. Gross Profit ₹260 Cr
  5. EBITDA ₹83 Cr
  6. Net Profit ₹63 Cr
  7. Average Procurement Cost (India) ₹37.38/liter +9.5%YoY

What they filed

Q1 FY27: revenue up 6.1%, net profit down 64.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue903 803 808 901 855 −5%822 +2%845 +5%956 +6%
EBITDA87 83 67 62 77 −11%57 −31%29 −57%34 −45%
Net profit59 77 57 62 54 −8%57 −26%55 −4%22 −65%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue GrowthEBITDA MarginProcurement
Africa26.9%13%1.98 LPD
Orgafeed29.4%17.6%—
India Standalone——16.75 LPD

Capital allocation

  • Capex ₹280 Cr
    • Greenfield expansion in Maharashtra for a fully integrated facility with 10 lakh liters capacity
    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.
  • M&A HR Food Processing Private Limited (OSAM brand) Acquisition · Pending regulatory

    Consistent with predefined inorganic growth plan, strong presence in Bihar and Jharkhand, operates on premium brand OSAM.

    In line with this framework, our Board recently approved the acquisition of 100% stake in HR Food Processing Private Limited. The company operates on the premium brand OSAM and has established a strong presence in Bihar and Jharkand. This transaction is consistent with a predefined inorganic growth plan.
  • Liquidity Liquidity disclosed Cash balance expected to be utilized for inventory buildup during flush season and the OSAM acquisition.
    On the balance sheet front, in Q2, we expect to utilize our cash balance towards inventory buildup during flush season and the OSAM acquisition, which is expected to complete in the next few days.

Guidance & targets

Profitability

  • Margin Trend Profitability · Q2 FY26 · High confidence Improve
    We expect this trend to improve in Q2 FY '26 as the full impact of lower procurement prices will be reflected in the current quarter.

    — Dodla Sunil Reddy

Growth

  • Overall Growth (absolute terms) Growth · FY27 · High confidence 15-20%
    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.

    — Murali Mohan Raju

  • Overall Growth (volume-wise) Growth · post monsoon · Medium confidence 7-8%
    It will come back to the same say volume-wise 7%, 8% and value-wise, maybe between the 10% to 15% or 12%, 13%.

    — Dodla Sunil Reddy

  • Overall Growth (value-wise) Growth · post monsoon · Medium confidence 10-15% or 12-13%

    — Dodla Sunil Reddy

  • Africa Growth Growth · Medium confidence Higher teens
    Africa and Uganda are higher teens.

    — Dodla Sunil Reddy

  • Orgafeed Growth Growth · Medium confidence Higher teens
    Orgafeed will also be in the higher teens of growth.

    — Dodla Sunil Reddy

  • India Growth (without OSAM) Growth · Medium confidence Lower teens
    India being in the lower teens.

    — Dodla Sunil Reddy

  • India Growth (with OSAM) Growth · Medium confidence Higher teens (15%)
    We are not yet considered OSAM -- without OSAM is where we are looking at this lower teens of India. With OSAM, it should be up a little on the higher teens, the same, which is 15% of growth.

    — Dodla Sunil Reddy

M&A

  • OSAM Acquisition Completion M&A · next few days · High confidence Complete
    The OSAM acquisition, which is expected to complete in the next few days.

    — Murali Mohan Raju

What to watch in Q2 FY26

Q2 FY26 Margin Improvement

Q2 FY26
Current Q1 FY26 EBITDA margin 8.2%, PAT margin 6.2%, under pressure.
Target Improved margin profile.

Why it matters

Margin recovery is key to overall profitability, especially after Q1 pressure from procurement costs and VAP sales mix.

We expect this trend to improve in Q2 FY '26 as the full impact of lower procurement prices will be reflected in the current quarter.

Risks & concerns

  • Impact of Changing Seasonal Patterns

    medium

    Early rains dampened summer demand for high-margin value-added products like curd, flavored milk, and ice cream, impacting sales mix and profitability.

    Management acknowledged

  • Procurement Prices Outpacing Realization

    medium

    Procurement prices grew faster than milk realization prices in Q1 FY26, leading to pressure on the margin profile.

    Management acknowledged

  • Kenya Plant Underutilization due to Permit Restrictions

    medium

    The Kenyan government's restrictive permits for milk import from Uganda create instability and affect the utilization of the Kenya plant, impacting the Africa business.

    Management acknowledged

Q&A highlights

7 direct
Milk Prices and Q2 Profitability Outlook Direct
We do think that the milk procurement prices have corrected and it is looking good for this coming quarter, where we are confident that we will be able to improve our margins over the last quarter.

Analyst sought clarity on the impact of milk price corrections on future profitability, and management provided a positive outlook for Q2 margins.

Asked by Aniruddha Joshi, ICICI Securities

Excess Inventory Levels (SMP & Butter) Direct
With regard to the inventory, sir, as of now, we are having butter only INR9.7 crores as against INR155 crores of last year June '24. So the substantial reduction. Even the skimmed milk power also, last year, we have around INR144 crores, but now we have only INR17 crores.

Analyst inquired about inventory buildup, and management confirmed a significant reduction, indicating better balance sheet hygiene.

Asked by Aniruddha Joshi, ICICI Securities

Lost Sales in VAP due to Monsoon Direct
Curd, I think we had a degrowth in terms of the first quarter comparatively. It was around 3%, I think, if I'm right.

Analyst asked about the impact of unseasonal rains on high-margin VAP sales, and management confirmed a degrowth in curd and volume loss in lassi/butter milk.

Asked by Aniruddha Joshi, ICICI Securities

B2B vs B2C Strategy and Pricing Direct
I think pricing, that is the reason we are keeping where it is and not reducing the price for volume share.

Analyst questioned the strategy regarding B2B sales and potential price reductions for volume. Management clarified their focus on B2C and maintaining a 'mass premium' pricing strategy without sacrificing price for volume.

Asked by Deepak, Unifi Capital

Sustainability of Orgafeed Margins Direct
This quarter, we have a very good performance of 17.6% as against average of last year around 15%. So probably there may be 1% here or there, but we are intact with the volume or the margins.

Analyst sought to understand if the high Orgafeed margins were sustainable, and management expressed confidence in maintaining them due to stable raw material prices and selling prices.

Asked by Rajat Setiya, ithought PMS

Africa Procurement Costs and Competition Direct
And Africa, see now it is very stable. Procurement also is very stable. And we are expecting by year-end further volume growth will get in Africa.

Analyst inquired about rising procurement costs and competition in Africa. Management confirmed stable prices and a consolidated market position, expecting future volume growth.

Asked by Abhishek Mathur, Systematix

QoQ Gross Margin Reduction Partial
So basically, sir, Q-on-Q, the margins, minor reduction was there basically because of the sale of fat and butter and SMP. That was only one of the reasons. And generally in the Q1, we have a value-added product, but that was reduced like our butter milk or the lassi or the curd.

Analyst questioned the Q-o-Q gross margin decline despite stable procurement. Management attributed it to a higher mix of lower-realization bulk sales and reduced sales of high-margin VAPs.

Asked by Aditya Khandelwal

VAP Growth Revival in July Direct
Yes, yes. The first 2 weeks was good, now we have the cyclonic weather again. But still overall, it's good.

Analyst asked about a potential revival in VAP sales in July. Management confirmed initial good growth, but noted subsequent weather impact, maintaining an overall positive outlook.

Asked by Abhishek Mathur, Systematix

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Dodla Dairy commenced FY26 with record quarterly revenues of ₹1,007 crores, marking a 10.5% year-on-year growth. Despite this top-line achievement, the company reported an EBITDA margin of 8.2% and a PAT margin of 6.2%. This performance was influenced by changing seasonal patterns and procurement price dynamics, which led to margin pressure during the quarter.

Africa Business Growth and Profitability

The Africa business demonstrated robust growth, with revenue increasing by 26.9% year-on-year. Milk volume grew by 19% to 1.6 lakh liters per day, contributing ₹81 crores in revenue. However, the EBITDA margin for Africa was 13%, which is lower than the previous year, primarily due to the strategic pricing of the new Kenya plant aimed at capturing the mid-market and an increase in procurement prices compared to Q1 FY25.

Orgafeed Business Outperformance

The Orgafeed business continued its positive trend, with revenue growing by 29.4% and EBITDA by 84.4% year-on-year. The EBITDA margin for Orgafeed reached 17.6%, up from an average of 15% last year. Management attributed this strong performance to stable raw material prices and increased selling prices, with expectations for this trend to continue given the current plant capacity utilization is less than 50%.

Strategic Expansion and M&A Initiatives

Dodla Dairy is pursuing strategic expansion through both organic and inorganic routes. The Board approved the acquisition of a 100% stake in HR Food Processing Private Limited, which operates the premium OSAM brand in Bihar and Jharkhand, expected to close shortly. Additionally, the ₹280 crores greenfield expansion in Maharashtra, targeting a 10 lakh liters per day capacity, is on track, with daily procurement already at 2.6 lakh liters.

Procurement and Pricing Dynamics

Average procurement cost in Q1 FY26 was ₹37.38 per liter, an increase from ₹34.15 per liter in Q1 FY25. This rise in procurement prices outpaced milk realization prices, contributing to margin pressure. However, procurement prices have shown a sequential decline in July to ₹36.90 per liter, and management anticipates that the full impact of these lower prices will be reflected in Q2 FY26, leading to improved margins.

VAP Sales and Seasonal Impact

The contribution of Value-Added Products (VAP) to overall sales was 36.2%. Unseasonal early rains significantly impacted summer demand for VAP like curd, flavored milk, and ice cream. Curd sales experienced a 3.2% year-on-year degrowth, and products like lassi and butter milk saw significant volume loss. This shift in product mix towards lower-realization bulk sales (₹57.7 crores in Q1 FY26 vs ₹35.5 crores in Q1 FY25) also contributed to the gross margin squeeze.

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