Dodla Dairy LimitedQ1 FY27 Results & Financial Update

The Board approved a primary investment of INR 11.65 crores for an approximate 2% stake in Sids Farm Private Limited to gain exposure to the fast-growing premium D2C dairy segment and learn from modern high-value consumption patterns.

Tamil Nadu and Karnataka exhibit significant price gaps of over INR 10 and INR 6-7 respectively compared to cooperatives; consequently, DDL focuses on geographical expansion rather than aggressively pushing prices in mature core markets.

While national cooperatives like Amul and Mother Dairy implemented milk price hikes, southern cooperatives have lagged, creating margin pressures and payment delays for their back-end suppliers.

Farmers using Dodla dairy cattle feed achieve an average productivity of around 14 liters per farmer compared to 11 liters for non-Dodla feed consumers, highlighting the efficacy of feed initiatives.

Strong demand was witnessed across summer-oriented products, with curd and curd-based products growing 41.4% year-on-year to 642.6 million metric tons per day in value terms.

Consolidated milk sales volume stood at 13.6 lakh liters per day, representing a 14.5% year-on-year increase.

OSAM Dairy recorded revenues of INR 91 crores for the quarter, contributing healthily to curd and VAP sales volumes as integration progresses.

The Maharashtra Greenfield project is progressing according to plan, with commercial operation timelines remaining intact.

Management is evaluating optimal utilization of the Chandel plant, including potential relocation of flavored milk production to serve Bihar and Jharkhand, while revisiting BIADA land allocation strategies for capital efficiency.

Kenya processing capacity utilization is ramping up towards full utilization, currently running at approximately 80% against an installed capacity of 1.5 lakh liters.

The company avoided lump-sum price hikes and adopted a gradual approach, implementing a ~1.4% price increase in DDL and ~4% in Africa during Q1, with another 2% to 2.5% correction planned for the ongoing quarter.

Management expects gradual margin recovery from Q2 onwards toward normalized 7% to 8% EBITDA margins as recent price corrections take effect.

Employee expenses rose 18% year-on-year to INR 56 crores due to the addition of OSAM and higher wage criteria under new Labour Laws.

The company remains net debt-free with approximately INR 689 crores in cash and investments, comfortably funding the INR 590 crores capex program alongside OSAM and Africa expansions without leverage.

Accounts receivable remain low with an average DSO of 1.5 to 2 days, while farmer payables are settled every 15 days and other expenses monthly.

Management maintains full-year consolidated guidance of 10% volume growth and 15% revenue growth.

The company targets maintaining 7% to 8% EBITDA margins and expects Africa revenue to continue contributing around 10% of total revenue over the next 2 to 3 years.

Management clarified that EBITDA margins are expected to return to the 7% to 8% range as recent price corrections (averaging INR 2 per liter for milk and INR 3-4 for VAP implemented post-July 15) fully transmit to consumers.

Management detailed that Q1 procurement totaled 21.13 lakh liters per day, comprising 17.23 lakh liters in India (3% growth), 2.52 lakh liters in overseas Africa (28.5% growth), and 1.39 lakh liters from OSAM/HR Foods.

CFO explained that the INR 250+ crores increase in goodwill and intangibles relates to the OSAM acquisition (INR 100 crores goodwill, INR 150 crores branding), subject to standard fair value amortization with no unexpected write-offs planned.

Management noted that despite good traction and volume growth in ice cream (sales rising from INR 16 crores to INR 22 crores in Q1), no major capital expansion is planned currently as existing seasonal capacity suffices.