Dodla Dairy Ltd – Fundamental Analysis

 CMP: ₹1,462 | Market Cap: ~₹8,800 Cr (approx.)

Dodla Dairy Limited, incorporated in 1995 and headquartered in Telangana, is one of India’s leading integrated dairy companies. With operations spanning across 11 Indian states and presence in Kenya & Uganda, the company has built a strong B2C dairy brand portfolio under names like Dodla, Dodla Dairy, KC+ in India and Dairy Top, Dodla in Africa.

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📌 Business Overview

• Products: Fresh milk, curd, lassi, buttermilk, flavored milk, paneer, ghee, doodh peda, SMP, ice cream, and milk-based sweets.

• Geographic Mix (H1 FY25): India contributes 91%, while Africa contributes ~9%.

• Distribution: 55 sales offices, 2,750 agents, 2,050 distributors, 645 Dodla retail parlours, and growing African distribution.

• Milk Procurement: Directly from 1.4 lakh farmers across 8,000 villages; procurement rose from 12.5 LLPD in FY22 to 16.8 LLPD in FY24, and further to 18.7 LLPD in Q1 FY26 (record high).

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📊 Q1 FY26 Financial Highlights

Dodla delivered record revenues despite seasonality pressure on high-margin products:

Particulars	Q1 FY26	Q1 FY25	YoY Growth
Revenue	₹1,007 Cr	₹912 Cr	+10.5%
Gross Profit	₹260 Cr	₹221 Cr	+18%
EBITDA	₹83 Cr	₹105 Cr	-21%
PAT	₹63 Cr	₹65 Cr	Slight decline
EBITDA Margin	8.2%	11.5%	Pressure from procurement costs

Key Drivers:

• Milk Sales: 11.9 LLPD (+4.9% YoY), with 6% growth in India & 26% in Africa.

• Value-Added Products (VAP): Contribution dipped to 36.2% of revenues due to early monsoon.

• Other Income: ₹17 Cr (+144% YoY), boosted by GST refund & higher interest income.

• Inventory: Butter & SMP inventory slashed sharply, improving balance sheet hygiene.

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📈 Long-Term Financial Trends (FY22–FY25)

• Sales Growth: From ₹2,243 Cr in FY22 → ₹3,720 Cr in FY25 (39% growth).

• Profit Growth: Net profit rose from ₹133 Cr in FY22 → ₹260 Cr in FY25.

• Operating Margins: Fluctuated between 7–13%; FY25 OPM at 10%.

• ROE: Stable at ~20% in FY25, reflecting efficient capital deployment.

• Cash Flow: FY25 CFO strong at ₹520 Cr, compared to negative ₹1 Cr in FY24.

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🚀 Growth Drivers

1. Record Revenue & Procurement: Q1 FY26 revenue of ₹1,007 Cr, supported by record procurement of 18.7 LLPD.

2. Inorganic Growth – OSAM Acquisition: Expands into Bihar & Jharkhand; scope for margin improvement.

3. Greenfield Expansion – Maharashtra: ₹280 Cr capex at Solapur, aiming for 10 LLPD fully integrated facility.

4. Africa Growth: 27% YoY revenue growth; Uganda market leader in yogurt, Kenya capacity ramping up.

5. Orgafeed (Cattle Feed): 29% YoY revenue growth; margins expanded to 17.6%, becoming a stable high-margin business.

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⚠️ Challenges

1. Weather Impact: Extended monsoon dented sales of curd, lassi, and buttermilk (curd degrew 3%).

2. Margin Pressure: Milk procurement cost up 9.5% YoY (₹37.38/litre vs ₹34.15), squeezing EBITDA margins.

3. Kenya Plant Utilization: Running at 65k–70k LPD vs. 1.5 LLPD capacity due to regulatory restrictions.

4. Competition: Pricing pressure from cooperatives; gross margins lower than some peers.

5. Seasonality Risk: Heavy dependence on VAP sales in summers makes business vulnerable to weather variations.

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🏦 Shareholding (as of Jun 2025)

• Promoters: 59.69%

• FIIs: 10.03% (declining trend)

• DIIs: 19.22% (increasing steadily)

• Public: 11.05%

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🔮 Outlook

Management remains cautiously optimistic for FY26:

• Revenue Growth: 10–15% CAGR expected.

• EBITDA/PAT Growth: 15–20%, aided by lower procurement prices from Q2 onwards.

• Strategic Focus:

  • Expanding VAP portfolio (paneer, ghee, premium milk).

  • Scaling Orgafeed & African operations.

  • Integration of OSAM and Maharashtra plant to diversify revenue base.

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✅ Investment Thesis

Dodla Dairy is positioning itself as a pan-India branded dairy player with steady African growth and diversification into cattle feed. While Q1 margins were impacted by weather and procurement costs, the company’s long-term fundamentals remain robust with strong cash flows, healthy balance sheet, and strategic expansions.

At ₹1,462/share, the stock trades at ~34x FY25 EPS (₹43.1). Valuations look reasonable considering the 17–20% profit growth guidance and rising contribution from higher-margin segments (VAP, Orgafeed).

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📌 Conclusion

Dodla Dairy’s Q1 FY26 results reflect resilience in topline growth despite weather-induced headwinds. The upcoming OSAM acquisition and Maharashtra greenfield project could be game changers, helping Dodla transition into a wider national footprint dairy brand. With procurement stabilization and better product mix, margins are likely to recover from Q2 FY26 onwards.

Verdict: A steady compounder in the dairy space; attractive for long-term investors seeking exposure to India’s growing organized dairy market.