Parag Milk Foods Limited

Parag Milk Foods achieved a significant milestone in Q2 FY26, recording its highest-ever quarterly revenue of ₹1,008 crores, marking a 16% year-on-year growth. This robust performance was underpinned by a solid 10% volume growth. For the first half of FY26, revenue stood at ₹1,859 crores, a 14% increase year-on-year, reflecting consistent business fundamentals and consumer trust.

The company's core categories, including ghee, cheese, and paneer, continued to drive growth, expanding by 14% in volume this quarter and contributing 59% to total revenue. The new age business, encompassing Pride of Cows and Avvatar, demonstrated exceptional growth of 79% year-on-year, now accounting for 9% of the total turnover, up from 6% last year. Parag Milk Foods has also ventured into the protein snacking segment with the launch of Avvatar Protein Wafer Bar, aiming to address protein deficiency and expand its health and nutrition portfolio, targeting 20% of the portfolio from this segment in the next 3-4 years.

Despite facing significant input cost inflation, with milk prices increasing by 16% year-on-year and 2% sequentially to an average of ₹38 per litre, Parag Milk Foods successfully maintained its EBITDA margins. The EBITDA grew by 16% year-on-year to ₹89 crores, with margins at 8.9% compared to 8.8% last year. This was attributed to the brand's pricing power, an improved product mix favoring higher-margin new age products, and enhanced operational efficiencies. Gross margins, while improving year-on-year, saw a marginal sequential dip due to the gradual cost push.

The company made substantial progress in optimizing its capital structure. Consolidated net debt was reduced by ₹125 crores, bringing the total net debt down to ₹436 crores as of September 2025 from ₹561 crores in March 2025. This deleveraging resulted in a net debt-to-EBITDA ratio of 1.4x and a net debt-to-equity ratio of 0.4x. A key factor in this reduction was the conversion of FCCB issued to IFC in 2021 into equity, alongside healthy operating cash flow generation of ₹99 crores in H1 FY26.

Management emphasized a 'Parag 2.0' journey, highlighting significant improvements in corporate governance. This includes a new Board, the appointment of Deloitte as internal auditors, and a strengthened management team with new business heads for various segments like general trade, modern trade, HoReCa, liquid milk, and dedicated leadership for Pride of Cows and Avvatar. The company aims to address past concerns and build investor confidence through consistent performance and robust internal controls.

The dairy industry is experiencing a significant shift from unorganized to organized players, driven by consumer preference for packaged products due to perceived quality and consistency. Parag Milk Foods, with its diverse portfolio across ghee, cheese, and paneer, is well-positioned to capitalize on this trend. The company believes its value-added products and strong brand presence will enable it to gain market share as the organized sector expands.