Dodla Dairy Q1 FY27 earnings call

Dodla Dairy achieved its highest-ever quarterly revenue of ₹1,198 crores, marking a 19% year-on-year increase. This was supported by a record milk procurement of 21.1 lakh liters per day, up 13% YoY, and robust growth in value-added products (VAP). Despite strong top-line growth, profitability was impacted, with EBITDA at ₹65 crores (5.4% margin) and PAT at ₹41 crores, reflecting a year-on-year decline.

The company experienced continued pressure on profitability due to elevated milk procurement prices (₹41.3 per liter in Q1 FY27 vs ₹37.4 in Q1 FY26) and increased operational costs, including a 48% rise in packing material costs. Management noted that these costs were not fully passed on to consumers. However, they anticipate a gradual recovery in margins from Q2 FY27 onwards, targeting 7-8% EBITDA margins for the current year, through further price pass-throughs of 2-2.5% in the ongoing quarter.

VAP sales reached a record ₹415 crores, growing 17.6% year-on-year, driven by a prolonged summer season and strong demand for products like curd, buttermilk, and flavored milk. On a like-to-like basis, excluding bulk sales, VAP growth was 40.6% YoY. Curd and curd-based products showed significant growth of 41.4% in value and 44.9% in sales volume, reaching ₹333.96 crores in India for the quarter.

The Africa business delivered a strong quarter with revenues of ₹154 crores, a 45.6% YoY increase, and EBITDA of ₹24 crores, up 74% YoY. Milk sales volume in Africa grew 33% to 214,000 liters in Q1 FY27. The OSAM business, following its acquisition, contributed ₹91 crores in revenue and is showing gradual improvements in profitability through operational efficiencies.

Dodla Dairy is progressing with its Maharashtra Greenfield project, with commercial operations on track. The company also announced an investment of ₹11.65 crores for a 2% stake in Sids Farm Private Limited, a premium D2C dairy brand, to gain insights into the high-value dairy segment. The company remains net debt-free with ₹689 crores in cash and investments, which comfortably funds its ₹590 crores capex program.

Milk procurement reached a record 21.1 lakh liters per day, a 13% YoY increase, supported by improved milk supply. The average procurement cost was ₹41.3 per liter, while the average milk sales price was ₹59.4 per liter. Management expects procurement costs to normalize (maintain current levels) from Q2. They noted that competitors like Amul and Nandini have taken price hikes in ghee and butter, and anticipate similar actions in liquid milk, especially from Southern cooperatives facing payment pressures.

The company maintains approximately 50% market share in Uganda's long-life milk and yogurt categories. In Kenya, processing capacity utilization is ramping up towards full utilization. Dodla aims for 8-10% volume growth in India, with newer territories contributing to this target. The company emphasizes a direct procurement model and strong farmer relationships as key strengths.