Dodla Dairy — Q4 FY26 earnings call

Call held 18 May 2026

Management summary

Dodla Dairy delivered record revenues in Q4 FY26 and full year FY26, showcasing resilient performance amidst challenging industry conditions marked by high milk procurement costs. While margins were compressed due to input inflation and a strategic decision to prioritize market share, the company saw strong growth in its Africa and OrgaFeed segments. Management anticipates a gradual margin recovery in FY27 as procurement costs normalize and pricing actions take effect, alongside continued strategic expansions.

Highlights

  • Q4 FY26 revenue reached a highest-ever ₹1,074 crores, reflecting an 18% year-on-year growth primarily driven by volume expansion.

  • Full year FY26 revenue also hit a record high of ₹4,125 crores, growing 10.9% year-on-year, demonstrating resilient performance despite industry challenges.

  • The Africa business recorded robust growth with ₹151 crores revenue in Q4, a 48% YoY increase, and achieved its highest-ever EBITDA of ₹18 crores for the quarter.

  • OrgaFeed business delivered a strong revenue growth of 23.2% year-on-year, complementing core dairy operations and strengthening farmer relationships.

  • Milk procurement levels remained stable at 18.5 lakh liters per day in Q4, an increase of 13.4% year-on-year, underscoring strong procurement network.

Concerns

  • Q4 FY26 EBITDA margin stood at 5% and PAT margin at 6.5%, with margins remaining under pressure due to elevated milk procurement costs and a calibrated pricing strategy.

  • Adjusted PAT for FY26 was approximately ₹215 crores (5.2% margin) after excluding one-off tax credits and interest income, indicating underlying margin pressure.

  • Packaging material costs have increased by 30%, adding to input cost inflation.

  • The overall VAP portfolio could not grow to its full potential due to operational variability, though future growth is targeted.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹1,074 Cr
    YoY +18.1%
  • EBITDA Margin
    5%
  • PAT Margin
    6.5%

FY26

  • Revenue
    ₹4,125 Cr
    YoY +10.9%
  • EBITDA Margin
    7.5%
  • PAT Margin
    6.5%
  • Adjusted PAT
    ₹215 Cr

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

  • Africa Business
    ₹151 Cr Q4 FY26 Revenue48% Q4 FY26 Revenue Growth₹18 Cr Q4 FY26 EBITDA60% Q4 FY26 Liquid Milk Sales Growth
  • OrgaFeed Business
    23.2% FY26 Revenue Growth11% Q4 FY26 Margins
  • OSAM Business
    ₹81.9 Cr Q4 FY26 Revenue₹2.7 Cr Q4 FY26 EBITDA21% Q4 FY26 Gross Margins
  • India Standalone
    6.5% Q4 FY26 EBITDA Margin₹58.4/liter Q4 FY26 Average Milk Sales Price₹41/liter Q4 FY26 Average Procurement Cost₹230 Cr Q4 FY26 Curd Sales19.1% Q4 FY26 Curd Sales Growth5.5% Q4 FY26 Liquid Milk Sales Volume Growth16.5% Q4 FY26 VAP Volume Growth

Capital allocation

high confidence
  • Capex ₹430 Cr
    • Expansion capex (HR Food) ₹271 Cr
    • Maharashtra project ₹86 Cr
    • Maintenance capex ₹73 Cr
    Our capital investment done in FY '26 is about INR430 crores. This includes around INR271 crores of expansion capex in HR Food, INR86 crores in Maharashtra during FY '26, taking the cumulative Maharashtra spend across FY '25 and FY '26 to INR106 crores against a total project envelope of INR280 crores and the balance INR73 crores of maintenance capex.
  • Debt Debt disclosed
    Our debt-to-equity remains under control at 0.03 levels.
  • Dividend ₹5/share (final)
    For FY '26, the board has recommended a final dividend of INR5 per equity share.
  • Liquidity Cash ₹649 Cr Includes cash, bank balance, and current/non-current investments, all liquid in nature.
    The company generated healthy cash flow from operations of INR295 crores during the year, while total cash and cash equivalent stood at INR649 crores as of 31st March 2026. This includes cash and bank balance plus our current as well as non-current investments, as all of those are liquid in nature.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 · Medium confidence low to mid-teens
    We expect revenue growth to be in the low to mid-teens, supported by OSAM's full year contribution, Africa continuing on its current trajectory, and an 8% to 9% organic growth in our India business.

    — Dodla Sunil Reddy

Profitability

  • Gross Margin Recovery Profitability · FY27 · Medium confidence 50 to 100 basis points
    are expecting a gradual gross margin recovery of 50 to 100 basis points over FY26 levels as procurement normalizes and our pricing actions take effect.

    — Dodla Sunil Reddy

Tax Rate

  • Effective Tax Rate Tax Rate · post FY26 · High confidence 25 to 27%
    Effective tax rate will return to the normal 25 to 27 range post completion of the favorable tax orders we received in FY26.

    — Dodla Sunil Reddy

Product Mix

  • VAP Contribution Product Mix · High confidence 32% to 34%
    broadly we are targeting closer to 32% to 34% in terms of VAP contribution.

    — Dodla Sunil Reddy

Africa Business

  • Contribution to Consolidated Revenue Africa Business · FY28 · High confidence 15% to 18%
    We see Africa scaling towards 15% to 18% of consolidated revenue by FY28, supported by a Phase 2 expansion in Uganda, which will include pasteurized milk and milk products that will be sold in Uganda.

    — Dodla Sunil Reddy

  • Sustainable Volume Growth Africa Business · current year · High confidence 20%
    The sustainable growth numbers in terms of volume we are confident of maintaining the 20% kind of growth numbers in the current year.

    — Dodla Sunil Reddy

  • Sustainable Value Growth Africa Business · High confidence INR 600 crores

    Previously INR 500 crores → INR 600 crores

    So basically, last year we've done around INR500 crores, on that talking about 20%, INR600 crores approximately. That is the guiding number.

    — Murali Mohan Raju

OSAM Business

  • Margin Convergence Timeline OSAM Business · Medium confidence 6 to 12 months
    we look at between 6 to 12 months that you will see the all the improvements coming into effect fully and then on it'll come back to the regular margins as the overall company's structure.

    — Dodla Sunil Reddy

Maharashtra Plant

  • Procurement Target Maharashtra Plant · by end of this year · High confidence minimum 5 lakh liters per day

    Previously 3 lakh average → minimum 5 lakh liters per day

    So right now, the average procurement Maharashtra what we are procuring is 3 lakh average right now for the last couple of months onwards. So once season comes by end of this year, we are targeting minimum 5 lakhs.

    — BVK Reddy

What to watch in Q1 FY27

Milk Procurement Cost Normalization

Next month or so / Q1 FY27
Current INR 41 per liter (Q4 FY26 average)
Target Reduction by ~INR 1 per liter

Why it matters

Directly impacts gross margins and overall profitability, a key driver for margin recovery.

We're anticipating the procurement improves, we should get down another rupee or so will be coming down in the procurement price.

Risks & concerns

  • Input Cost Inflation (Milk Procurement)

    high

    Milk supplies remained constrained for most of the year, and procurement cost inflation was sharp, leading to margin pressure.

    Management acknowledged

  • Input Cost Inflation (Packaging & Fuel)

    high

    Packaging material costs increased by 30%, and there is uncertainty regarding future fuel price movements, which could significantly impact freight costs.

    Management acknowledged

  • Global Price Uncertainty

    high

    Uncertainty in global pricing of fuel, plastics, and agricultural commodities due to external factors like war and El Niño makes future cost projections difficult.

    Management acknowledged

  • Erratic Rainfall & Demand Impact

    medium

    Erratic rainfall affected demand for certain value-added products in some regions, and El Niño could impact milk yields.

    Management acknowledged

  • Market Share vs. Margin Trade-off

    medium

    The company did not fully pass on procurement cost increases to selling prices to maintain market share, resulting in margin compression.

    Management acknowledged

Q&A highlights

8 direct
Steady-state margin outlook Direct
I think it's more in terms of being cautious with this whole uncertain environment that we are in, because none of us are able to take sure of what is going to be pricing of fuel, pricing of plastics, the whole agriculture under impact with urea production none of this is very clear for us.

Management indicates a cautious stance on future margins due to macro uncertainties, suggesting current guidance is conservative.

Asked by Praveen Kumar

Reducing VAP seasonality Direct
We are trying to see that if it becomes a throughout-the-year product, what was exclusively a two to three months. We're trying to extend that to a six months period to see that people start using it as a refreshment rather than worrying about it as a summer product.

Highlights strategy to mitigate seasonality in key VAP products like buttermilk, lassi, and curd to drive more consistent revenue.

Asked by Praveen Kumar

OSAM margin convergence Direct
Basically, broadly it's on all fronts, right? It is on production, it's on market, and it's on procurement. I think the operational efficiencies that you are saying, I'll ask B.V.K. to give you more in detail what all are the operational efficiencies in OSAM that we have undertaken which will help us improve our margins.

Details the multi-pronged approach (SAP, infrastructure, quality, logistics) to improve OSAM profitability and align it with overall company margins within 6-12 months.

Asked by Praveen Kumar

Current dairy cycle and procurement costs Direct
Procurement was still under stress we are seeing improvement signs. And we hope that maybe in another month or so that'll also start to improve. I think Maharashtra and Karnataka have improved a bit in terms of productivity.

Provides an update on the challenging procurement environment, noting some signs of improvement in key states and expectations for further normalization.

Asked by Yash Goenka

Procurement cost and pricing strategy Direct
So we have passed on around to answer your question, I think we have passed on around INR1 of the inflation in the sales recovery that we have already done, currently that we are doing. We're anticipating the procurement improves, we should get down another rupee or so will be coming down in the procurement price.

Clarifies the extent of cost pass-through and management's expectation for future procurement cost reduction, which is critical for margin recovery.

Asked by Abhishek Mathur

Impact of packaging and freight costs Direct
So I think packaging material as a number has gone up by 30%. Most of the plastics that are there and we use a lot of the plastic, it's gone up by 30%. That small corrections is what we have passed on to the consumers in terms of the price corrections that we have taken.

Highlights specific input cost pressures beyond milk, indicating a broad inflationary environment and the company's strategy to absorb some costs.

Asked by Aditya

El Niño impact on VAP sales vs. milk yields Direct
If there is a severe drought, it's a two-way sword for us. Certain areas where there is a drought, animal husbandry improves because there is no other income for the farmers, they concentrate more on animal husbandry and therefore production normally improves.

Explains the nuanced impact of weather phenomena, where VAP sales can benefit from summer demand, but milk yields might be affected, creating a complex scenario for costs and revenues.

Asked by Aditya

Drivers of Africa business growth Direct
So I think what is going right is basically Uganda we've become a significantly large player and in Kenya we're just beginning to see that and Kenya is a much larger market than Uganda. Earlier we used to cater from Uganda to Kenya and due to the border disputes we were not able to cater to it properly because there would be restrictions on how much we could send.

Provides specific reasons for the strong growth in Africa, including market penetration in Uganda and Kenya, and overcoming past logistical challenges.

Asked by Ashay

3 min read 6 chapters

Detailed narrative

Q4 FY26 and Full Year Performance Highlights

Dodla Dairy reported its highest-ever quarterly revenue of ₹1,074 crores in Q4 FY26, marking an 18% year-on-year growth driven by volume expansion. For the full fiscal year, revenue reached a record ₹4,125 crores, up 10.9% YoY. Despite strong top-line growth, Q4 EBITDA margin was 5% and PAT margin 6.5%, impacted by elevated milk procurement costs and a strategic decision to not fully pass on price increases to maintain market share. Full year FY26 EBITDA margin stood at 7.5% and adjusted PAT margin at approximately 5.2%.

Africa Business: A Key Growth Engine

The Africa business demonstrated robust performance, with Q4 FY26 revenue of ₹151 crores, a significant 48% YoY increase, primarily fueled by over 60% growth in liquid milk sales. This segment achieved its highest-ever EBITDA of ₹18 crores for the quarter, benefiting from increased scale and operational efficiencies. Management views Africa as a crucial long-term growth driver, targeting its contribution to consolidated revenue to reach 15-18% by FY28, supported by a Phase 2 expansion in Uganda.

OrgaFeed and OSAM Businesses Update

The OrgaFeed business recorded a strong 23.2% year-on-year revenue growth for FY26, playing a strategic role in strengthening farmer relationships and the procurement network, despite a slight dip in margins due to higher raw material costs and distribution expansion. The OSAM business showed steady progress, with Q4 revenue of ₹81.9 crores and EBITDA of ₹2.7 crores. Management aims to improve OSAM's gross margins from the current 21% to 25% within the next 6 to 12 months through enhanced operational efficiencies.

Strategic Expansion Projects and Capex

Dodla Dairy is actively pursuing several expansion initiatives. The Maharashtra project is on schedule to commence commercial operations by the end of FY27, with ₹106 crores of cumulative capex already deployed. The company has also secured a 7-acre land parcel for a new dairy project in Bihar, with ₹4.4 crores allocated for land. Additionally, a greenfield expansion in Uganda is budgeted at ₹60 crores, slated for completion by year-end 2029. Total capital expenditure for FY26 amounted to ₹430 crores, maintaining a low debt-to-equity ratio of 0.03.

Margin Outlook and Input Cost Dynamics

Management anticipates a gradual recovery in gross margins by 50-100 basis points in FY27, driven by expected normalization of milk procurement costs and planned pricing actions. While milk procurement costs averaged ₹41 per liter in Q4, the company has already implemented some price hikes and expects further cost reductions. However, significant increases in packaging material (up 30%) and uncertainty surrounding fuel prices remain key concerns, with the company balancing cost pass-through with market share retention.

Product Mix and Sales Strategy in India

Dodla Dairy achieved its highest-ever milk sales of 14 lakh liters per day, reflecting continuous efforts to expand geographic reach. The value-added products (VAP) segment, excluding bulk sales, grew 21% year-on-year, with curd sales increasing 19.1% YoY. The company aims to improve its VAP mix to 32-34% of total revenue, focusing on curd, paneer, and ice cream, and is working to reduce the seasonality of products like buttermilk and lassi to ensure more consistent demand throughout the year.

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