Parag Milk Foods delivered strong Q3 FY26 results with revenue exceeding ₹1,000 crores and robust volume growth, particularly in its new age business. Despite significant commodity inflation, the company maintained sequential gross margins through strategic pricing and portfolio mix. However, YoY EBITDA and PAT saw some compression, partly due to inflationary pressures and an exceptional employee benefit provision. The company continues to focus on distribution expansion and brand building.
vs Q4 FY26
| Metric | Value | YoY |
|---|---|---|
| Revenue | ₹1.0K Cr | +14.0% YoY |
| Volume Growth | 0.08% | — |
| Gross Margin | 25.9% | — |
| EBITDA Margin | 7.6% | — |
| PAT (before exceptional) | ₹35 Cr | -2.0% YoY |
| 9M FY26 Revenue | ₹2.9K Cr | +14.0% YoY |
| Metric | Latest | Trend |
|---|---|---|
| Revenue(crores) | 1000 | |
| Volume Growth | 0.08% | |
| EBITDA Margin | 7.6% |
| Category | Headline | |
|---|---|---|
Capex | Capex disclosed entirely through in-house accruals | |
Debt | Gross ₹483 crores · Net ₹435 crores | |
Liquidity | Liquidity disclosed Generated ₹99 crores cash flow from operations in H1 FY26, sufficient to fund capex. |
| Category | Target | Priority |
|---|---|---|
| New Age Business | Revenue Contribution→20% | High |
| New Age Business | Growth Rate→15-20% | High |
| Working Capital | Working Capital Cycle→60-65 days | High |
| Distribution | Outlets Covered→10 million | Medium |
| # | Metric | |
|---|---|---|
| 01 | Milk Price Trajectory & Pricing Actions | |
| 02 | EBITDA Margin Improvement | |
| 03 | New Age Business Growth & Revenue Share | |
| 04 | Working Capital Cycle | |
| 05 | Distribution Expansion |
| Severity | Risk |
|---|---|
high | Commodity inflation (milk prices) Milk prices increased 20% YoY and 6.5% sequentially, expected to remain elevated in the near-term, requiring calibrated price increases. Management |
medium | Impact of B2B portfolio on gross margins The 30% B2B portfolio, especially Skimmed Milk Powder (SMP) as a byproduct, operates on thinner margins, impacting overall gross margin percentage. Analyst |
low | One-time employee benefit provision A ₹5.7 crores (consolidated) exceptional item was recognized due to changes from new Labour Codes. Management |
Parag Milk Foods reported a strong Q3 FY26, with revenue exceeding ₹1,000 crores for the second consecutive quarter, marking a 14% year-on-year increase. This growth was underpinned by an 8% volume expansion. For the first nine months of FY26, revenue reached ₹2,872 crores, also reflecting a 14% YoY increase with 8% underlying volume growth. Core categories like ghee, cheese, and paneer were pivotal, contributing 64% of total revenue and achieving a 12% volume growth.
The company's new age business, comprising Pride of Cows and Avvatar, demonstrated exceptional momentum, growing 123% year-on-year and crossing the ₹100 crores quarterly revenue mark for the first time. For the nine-month period, this segment now contributes 9% of overall revenue, up from 6% last year, highlighting its increasing strategic importance. Avvatar Protein Wafer Bar, a recent launch, already accounts for 8% of the Avvatar brand's revenue, indicating strong consumer response and successful scaling for nationwide distribution.
Despite significant commodity inflation, with milk prices rising 20% YoY and 6.5% sequentially, Parag Milk Foods managed to maintain its gross margin at 25.9% in Q3 FY26, similar to the previous quarter. This was achieved through disciplined pricing strategies, promotional activities, and an improved portfolio mix. However, the YoY gross margin saw a decline from 27.2% in Q3 FY25, leading to a Q3 FY26 EBITDA margin of 7.6%, down from 9% last year. The company noted that B2B sales, particularly of Skimmed Milk Powder, contribute to lower percentage gross margins.
The company demonstrated improved capital efficiency, with its Return on Capital Employed (ROCE) increasing from 8.6% to 14.3%. The working capital cycle also saw a significant improvement, reducing from 75 days to approximately 60 days. Furthermore, Parag Milk Foods has actively reduced its debt; gross debt decreased from ₹615 crores as of March 31, 2025, to ₹483 crores by September 30, 2025, with net debt at ₹435 crores. The outstanding NCDs, which were ₹150 crores in 2021, have been reduced to ₹81 crores, indicating a focus on deleveraging.
Parag Milk Foods continues to prioritize distribution expansion, having added approximately 30,000 new outlets year-to-date, with a strategic focus on the East and Northeast regions. The company aims to reach close to 10 million outlets across all states. Brand building remains a key priority, with impactful marketing campaigns for Gowardhan and Go brands, including associations with popular TV shows. Avvatar's brand presence was strengthened through collaboration with a Bollywood celebrity, aligning with its positioning for fitness and modern nutrition.