Skip to content

    Dodla Dairy

    DODLA
    Fast Moving Consumer Goods·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

    5

    • 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

    4

    • 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

    Single quarter

    07 metrics
    1. 01Revenue₹1,007 Cr+10.5%YoY
    2. 02EBITDA Margin8.2%
    3. 03PAT Margin6.2%
    4. 04Gross Profit₹260 Cr
    5. 05EBITDA₹83 Cr

    Segment breakdown

    Revenue GrowthEBITDA MarginProcurement
    Africa26.9%13%1.98 LPD
    Orgafeed29.4%17.6%—
    India Standalone——16.75 LPD
    Heatmap· 3 shared metrics

    Capital allocation

    3
    CategoryHeadline
    Capex

    ₹280 crores

    M&A

    HR Food Processing Private Limited (OSAM brand)

    acquisition · pending regulatory

    Liquidity

    Liquidity disclosed

    Cash balance expected to be utilized for inventory buildup during flush season and the OSAM acquisition.

    Guidance & targets

    9
    CategoryTargetPriority
    Profitability
    Margin Trend
    Improve
    		High
    Growth
    Overall Growth (absolute terms)
    15-20%
    		High
    Growth
    Overall Growth (volume-wise)
    7-8%
    		Medium
    Growth
    Overall Growth (value-wise)
    10-15% or 12-13%
    		Medium
    Growth
    Africa Growth
    Higher teens
    		Medium
    Growth
    Orgafeed Growth
    Higher teens
    		Medium
    Growth
    India Growth (without OSAM)
    Lower teens
    		Medium
    Growth
    India Growth (with OSAM)
    Higher teens (15%)
    		Medium
    M&A
    OSAM Acquisition Completion
    Complete
    		High

    What to watch in Q2 FY26

    5

    Q2 FY26 Margin Improvement

    Q2 FY26
    CurrentQ1 FY26 EBITDA margin 8.2%, PAT margin 6.2%, under pressure.
    TargetImproved 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

    3
    RiskSeverity

    Impact of Changing Seasonal Patterns

    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

    medium

    Procurement Prices Outpacing Realization

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

    medium

    Kenya Plant Underutilization due to Permit Restrictions

    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

    medium

    Q&A highlights

    8

    “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

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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%.

    04

    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.

    05

    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.

    06

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.