Dodla Dairy — Q3 FY26 earnings call

Call held 28 Jan 2026

Management summary

Dodla Dairy reported strong top-line growth in Q3 FY26, driven by robust volumes and significant contributions from Africa and Orgafeed. However, profitability was impacted by higher milk procurement costs and subdued winter demand, leading to gross margin compression. The company is actively pursuing strategic expansions in Maharashtra and Uganda, funded by internal accruals, while focusing on maintaining market share and product innovation.

Highlights

  • Consolidated revenue for Q3 FY26 stood at ₹1,025 crores, registering a healthy 13.75% year-on-year growth.

  • Africa operations delivered strong year-on-year revenue growth of 34.5% during the quarter, with 9-month EBITDA increasing from ₹31 crores to ₹39 crores.

  • Orgafeed business continued to deliver stable performance with 16% revenue growth and an 11.6% EBITDA margin in Q3 FY26.

  • Volume growth was strong across milk sales, curd sales, and VAP products, with VAP (excluding bulk sales) growing 23% YoY.

  • The company recorded a positive impact of tax reversal relating to earlier years of ₹22 crores due to a favorable order at ITAT.

Concerns

  • Gross margin compressed to 26% in Q3 FY26, down from 28.2% in Q3 FY25, primarily due to increased procurement costs.

  • EBITDA margin for Q3 FY26 was 7.7%, impacted by a ₹2.5 per liter sequential increase in procurement cost.

  • Bulk sales of SMP and butter dropped to negligible levels in Q3 FY26, compared to ₹72 crores in the same period last year.

  • A one-time provision of approximately ₹6 crores was made during the quarter towards revised labor code guidelines.

Key financials

  1. Revenue ₹1,025 Cr +13.8%YoY
  2. Gross Profit ₹267 Cr
  3. Gross Margin 26%
  4. EBITDA ₹79 Cr
  5. EBITDA Margin 7.7%
  6. Net Profit ₹69 Cr
  7. PAT Margin 6.7%
  8. Milk Procurement Volume 18.3 lakh liters/day +7.5%YoY
  9. Liquid Milk Sales Volume 13.9 lakh liters/day +19.6%YoY
  10. Curd Sales Volume 355 metric tons/day +15.5%YoY
  11. Average Procurement Cost ₹39.8/liter
  12. Average Milk Sales Price ₹57.7/liter

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

SegmentRevenueEBITDA
Africa (Q3 FY26)₹133 Cr₹17 Cr
Africa (9 Months FY26)₹354 Cr₹39 Cr
Orgafeed (Q3 FY26)₹41 Cr—
Orgafeed (9 Months FY26)—₹17.6 Cr
OSAM (Q3 FY26)₹80 Cr₹0.85 Cr

Capital allocation

high confidence
  • Capex ₹280 Cr internal accruals, potentially subvention scheme
    • Maharashtra plant construction ₹280 Cr
    • Uganda greenfield expansion ₹50 Cr
    We have planned for INR280 crores of capex. Out of that INR69 crores, we already spent, INR212 crores is yet to be spent. ... We are planning for subvention scheme, but the application is in process. If that happens before March, we'll do that. We'll utilize that. Otherwise, we'll go for the internal accruals. As of date, we have around INR630 crores in the bank. So we'll utilize that. ... We plan to do an indicative capex of around 50 to 60 crores over a span of two years.
  • Liquidity Cash ₹630 Cr Sufficient internal accruals to fund capex requirements.
    As of date, we have around INR630 crores in the bank. So we'll utilize that.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · Longer term · High confidence 8-9%
    So it is only optimism that it can only go up and not come down. So in a good year like last year, it will go up to the 10%, 11%. If it is a bad year, it will move up to the 8%, 9% kind of a margin, which we have been saying all the time.

    — Dodla Sunil Reddy

  • Consolidated EBITDA Margin Profitability · Coming quarter · Medium confidence 8-8.5%
    Now the other question coming to the margins that we are looking at, I think we'll be able to maintain this 8%, 8.5% margins for the coming quarter also with the consol level of all Africa and all that.

    — Dodla Sunil Reddy

  • Uganda New Plant Year 1 EBITDA Margin Profitability · Year 1 of operation · Medium confidence 15%
    And normally, when Uganda is also a little higher in terms of EBITDA margins, we can think of 15% kind of EBITDA margins on what we are going to be adding in the year 1 of operation itself.

    — Dodla Sunil Reddy

Pricing

  • Price Increase Requirement Pricing · Near term · High confidence ₹2-3 per liter
    I think the arbitrage that we will be looking at, at the current moment will be anywhere between INR2 to INR3 as a requirement of the price increase that we need to do, across the board.

    — Dodla Sunil Reddy

  • Average Realization Target Pricing · Near term · High confidence ₹63-64
    Roughly, we are now at INR60, INR61 as an average realization. And with the product mix, we'll have to make it to INR63 or INR64 is where we'll be looking at from a stand-alone India point of view.

    — Dodla Sunil Reddy

Product Mix

  • VAP Contribution to Sales Product Mix · Longer period · Medium confidence 30-32%
    I think over a longer period, like I've always been repeating that it will have around 30%- 32% can be the targeted value-added component in the overall composition.

    — Dodla Sunil Reddy

Capacity

  • Uganda New Plant Capacity Capacity · High confidence 3 lakh liters
    So this now a new plant, what we are planning now, we are planning to set up 3 lakh liters capacity.

    — BVK Reddy

Revenue

  • Uganda New Plant Year 1 Revenue Revenue · Year 1 of operation · Medium confidence ₹100 crores
    But we are going at it now, at least to start within a year of operations commencement, adding at least INR100 crores of revenue.

    — Dodla Sunil Reddy

  • Maharashtra Additional Revenue Revenue · First year of operation · Medium confidence ₹500-600 crores
    So roughly, we can look at a INR500 crores to INR600 crores of revenue in the first year coming in because I look at it very simply as BVK said, even INR3 lakh increase with INR200 crores per lakh liter, even if I consider it to be base commodity kind of a business also, that will give that kind of INR500 kind of crores of revenue.

    — Dodla Sunil Reddy

Procurement

  • Maharashtra Procurement Volume Procurement · End of current financial year · High confidence 5 lakh liters

    From 200,000-210,000 liters today

    Right now, we are doing around 200,000-210,000 procurement from Maharashtra. We have planned so this financial end of this financial, our own procurement will be around 5 lakhs. So the infra, we're already creating, we have taken enough manpower. The people are in the field, and we keep on expanding.

    — BVK Reddy

Project Timeline

  • Maharashtra Plant Commercial Operation Project Timeline · End of FY27 · High confidence End of FY27
    Our Maharashtra project is progressing as per the scheduled time lines and is expected to start commercial operation by end of FY '27.

    — BVK Reddy

  • Uganda Plant Commercial Operation Project Timeline · End of FY28 · High confidence End of FY28
    Two years from now, so we think it will be in the end of the financial year '28.

    — Dodla Sunil Reddy

What to watch in Q4 FY26

Procurement Cost Trend

Next quarter
Current ₹39.8 per liter, up ₹2.5 sequentially
Target Stabilization or decrease in procurement costs

Why it matters

Procurement costs are a primary driver of gross margin, and their trend will indicate margin recovery.

Typically, our procurement costs come down with the arrival of the flush season. However, the trend was reversed this time around, and we saw about a INR2.5 per liter sequential increase in procurement cost.

Risks & concerns

  • Increased milk procurement costs

    high

    Procurement costs increased by ₹2.5 per liter sequentially due to industry-wide milk supply shortage caused by erratic rainfall last year, leading to gross margin compression.

    Management acknowledged

  • Subdued demand during winter season

    medium

    Subdued demand during winter prevented full pass-through of increased procurement costs, impacting margins and leading to a focus on maintaining market share.

    Management acknowledged

  • Impact of El Nino on future weather patterns

    medium

    Expectation of El Nino leading to higher summer days and weaker rainfall could further impact milk supply and necessitate price hikes if the gap between sales and procurement increases.

    Analyst acknowledged

  • Lower contribution from high-margin VAP products

    medium

    Value-added products like ghee, lassi, buttermilk, and ice cream had lower sales contribution sequentially due to early and severe winters, though YoY growth remained healthy.

    Management acknowledged

Q&A highlights

7 direct
Price hike strategy and quantum given higher procurement costs Direct
Basically, we will be looking at it more from a point of view of the summer setting in, based on the from a market point of view. So as the sales volumes start to shoot up, we normally take a price increase because we will have to compensate the lack of milk. But in terms the other way around the procurement does come much earlier and there is more milk, there will be a reduction in procurement, then we will anyhow get the benefit of both. ... I think the arbitrage that we will be looking at, at the current moment will be anywhere between INR2 to INR3 as a requirement of the price increase that we need to do, across the board.

Analyst probed on the timing and magnitude of price increases to offset rising procurement costs, a key factor impacting current margins.

Asked by Sanjay Manyal

Growth trajectory of value-added products (VAP) and its impact on working capital Direct
So basically, our value-added product portfolio has, in fact, grown from 23% to 25% compared last year to this year has grown by 2%. It was only the impact of what we had as our bulk sales, which I think was close to INR 312 crores that we had last year, but is not there this year, but is showing the overall decline. ... For now, it will remain the same, sir, because whatever we do, we either move it through distributors. We have only a very small exposure that we directly sell to the modern retail where it might be a 30-day payment, but that number is very, very small.

Question addressed the quality of revenue growth (VAP vs bulk) and clarified that VAP expansion through distributors does not significantly strain working capital.

Asked by Sanjay Manyal

Details of Africa expansion, specifically Uganda capacity and revenue potential Direct
Yes, sir, see in Uganda, especially now, we are planning only for Ugandan market only. ... Now what we acquired land is closer to the Kampala city, capital city, 100 kilometers closer to the city. So there, we are planning a fresh milk in the Kampala city because we have a lot of scope because the local dairies also fresh milk selling. ... So this now a new plant, what we are planning now, we are planning to set up 3 lakh liters capacity. ... So the capex -- doubling the existing capacity and revenue, you can roughly look at it as being around at INR60-liter kind of a scenario. So even if we do around INR1 lakh, we can go to INR100 crores, INR150 crores to start with.

Analyst sought specifics on the significant Africa expansion, including capacity, location, and financial projections, which is a key growth driver for the company.

Asked by Aditya

Performance of Orgafeed and OSAM segments, including revenue and EBITDA Direct
Last year, if you see Orgafeed quarter wise revenue, which was very like INR31 crores, INR32 crores, INR34 crores and INR33 crores, average around INR33 crores. But if you the current quarter, we are at INR 41, 41 and 40 Crore on quarter basis respectively, there is 16% of growth in the revenue. ... Yes. The revenue for the last -- last time, we had only two months, that is INR52 crores. For the current quarter, it is INR80 crores is the revenue. And EBITDA last time, it was INR1.3 crores, but this time, it is only INR85 lakh because so much of streamline was there and SAP implemented and infrastructure has also increased.

Analyst questioned the perceived stagnation of Orgafeed revenue and sought clarity on OSAM's latest financial contribution and margin, which are important for understanding segment performance.

Asked by Aditya

Impact of El Nino on milk prices and the outlook for value-added products in the coming year Direct
It is as an ongoing scenario. But your question is there's an El Nino, there is a severe summer that comes in and if the gap between the sales and the procurement does keep on increasing, there will be no other option but to pass on the impact of cost to the customers, and it will happen as a regular process that goes on if the severe El Nino does come in. ... More than ice cream, we are confident that our paneer and curd will move up the sale and OSAM also, which we have acquired has a little lower in terms of value-added products there as consolidated.

Question addressed a significant macro risk (El Nino) and its potential impact on input costs and demand for higher-margin products, crucial for future profitability.

Asked by Aniruddha Joshi

Funding for the Maharashtra plant capex and the company's overall liquidity position Direct
We have planned for INR280 crores of capex. Out of that INR69 crores, we already spent, INR212 crores is yet to be spent. ... As of now, we are planning for subvention scheme, but the application is in process. If that happens before March, we'll do that. We'll utilize that. Otherwise, we'll go for the internal accruals. As of date, we have around INR630 crores in the bank. So we'll utilize that.

Analyst inquired about the funding strategy for major capex projects and the company's cash reserves, providing insight into financial strength and capital allocation.

Asked by Deepak Lalwani

Reasons for low single-digit India stand-alone growth and potential market share loss Partial
It's not syndicated data. Our market share estimates are only our own. But compared to the things that we are saying is that the volume growth that we look at it as a 4%, I think given with the listed peers, it will not be significantly different in terms of it. ... It is only the value add or the bulk sales that keep adding the differential of moving it around. The major issue that we think is that the cooperators which are normally as comparatively sell it at less and we are more of a -- I mean the private sector being more at a premium sale.

Analyst challenged the company's India growth rate compared to peers and probed for market share dynamics, which is critical for assessing competitive position.

Asked by Resha Mehta

Revenue and EBITDA split and margin differences between Uganda and Kenya Direct
Yes. Overall revenue, we had around INR350 crores. Out of that, the major revenue LDL is INR 229 crores and CDL INR142 crores. ... Uganda is a low-volume, high margin country of operation. Kenya is a significantly larger volume and also comparatively to Uganda maybe 2%, 3% in terms of margin being a lower margin.

Question provided a detailed breakdown of the Africa business performance by country and highlighted the margin differentials, offering granular insight into international operations.

Asked by Resha Mehta

2 min read 6 chapters

Detailed narrative

Strong Revenue Growth Despite Headwinds

Dodla Dairy reported a consolidated revenue of ₹1,025 crores for Q3 FY26, marking a 13.75% year-on-year growth. This growth was primarily driven by strong volumes in liquid milk and value-added products, with milk procurement increasing by 7.5% YoY to 18.3 lakh liters per day. However, the company faced challenges from a ₹2.5 per liter sequential increase in procurement costs and subdued winter demand, which prevented full price pass-through.

Margin Compression and Profitability

The gross margin for Q3 FY26 compressed to 26% from 28.2% in the prior year, directly impacted by the higher procurement costs and the inability to fully pass them on to consumers. Consequently, the EBITDA margin stood at 7.7% and the PAT margin at 6.7%. The company also incurred a one-time provision of ₹6 crores for revised labor code guidelines, partially offset by a positive tax reversal of ₹22 crores.

Strategic Expansion in Africa and Maharashtra

Dodla Dairy's Africa operations continued to be a strong growth driver, achieving 34.5% YoY revenue growth in Q3 FY26 and a 77% increase in EBITDA for the nine-month period. The company is investing ₹50-60 crores over two years in a greenfield expansion project in Uganda, targeting a 3 lakh liter capacity plant by end of FY28. In India, the Maharashtra project is progressing, with ₹69 crores already invested and commercial operations expected by end of FY27, aiming for 5 lakh liters of procurement by the current fiscal year-end.

Value-Added Products and Product Mix Dynamics

While total value-added product sales were ₹258 crores in Q3 FY26, the VAP portfolio (excluding bulk sales) grew 23% YoY. The contribution of high-margin VAP products like ghee, lassi, and ice cream was sequentially lower due to early and severe winters. Management aims to increase VAP contribution to 30-32% of overall sales in the longer term, with specific focus on paneer and curd, which are showing healthy growth.

Orgafeed and OSAM Performance

The Orgafeed segment delivered stable performance with 16% revenue growth and an 11.6% EBITDA margin in Q3 FY26. For the nine-month period, Orgafeed's EBITDA increased from ₹13 crores to ₹17.6 crores. The OSAM acquisition contributed ₹80 crores in revenue in Q3 FY26, though its EBITDA was ₹85 lakhs, impacted by ongoing infrastructure upgrades and SAP implementation post-acquisition.

Outlook on Pricing and Margins

The management indicated a need for a price increase of ₹2-3 per liter to achieve an average realization of ₹63-64, especially with the anticipated onset of summer. They expect some pressure to persist in Q4 FY26 but anticipate a revival in summer. The company aims to maintain an 8-9% EBITDA margin range, with expectations of 8-8.5% consolidated margins for the coming quarter, despite the current challenging environment.

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