Dodla Dairy's Profits Decline Due to Rising Procurement Costs
Dodla Dairy has experienced a significant decline in its consolidated net profit, falling by 35.4% to Rs 40.6 crore in the first quarter of fiscal year 2027, compared to the same quarter in the previous year. This decline occurred despite a 19% increase in revenue, which amounted to Rs 1,197.9 crore.
During this period, the company's milk procurement volume grew by 13% year-on-year, reaching 21.1 lakh litres per day (LLPD), while milk sales volume increased by 14.5% to 13.6 LLPD. However, the rise in milk procurement prices outpaced the increase in realization prices, placing pressure on gross margins.
This situation led to a 21.3% year-on-year decline in EBITDA, which totaled Rs 64.9 crore, and a contraction of 280 basis points in the EBITDA margin, bringing it down to 5.4% for the quarter ending June 2026. The company's profit before tax also decreased by 32.4%, amounting to Rs 54.7 crore compared to Rs 81 crore in the corresponding quarter of the previous year.
In an effort to expand its market presence, the board of directors of Dodla Dairy approved an investment proposal of Rs 11.6 crore to acquire a 2% stake in Sids Farm, a premium dairy brand known for its antibiotic- and hormone-free products. Sids Farm has a strong presence in the direct-to-consumer and e-commerce sectors.
Dodla Dairy's managing director, Dodla Sunil Reddy, highlighted the company's strategy of leveraging a robust procurement cycle to build inventory for future quarters while maintaining market stability. He noted that despite a healthy milk supply, procurement prices remained elevated. Reddy mentioned that the company's value-added product (VAP) portfolio, including curd, buttermilk, lassi, and ice cream, achieved record sales, accounting for about a third of total sales.
The company also reported improvements in its Africa, OSAM, and Orgafeed businesses but faced challenges in its standalone business due to pricing pressures. Dodla Dairy is focused on its expansion plan, which aims to increase capacity, expand its geographic footprint, deepen market presence, and diversify its product portfolio.
On the Bombay Stock Exchange, Dodla Dairy's shares rose by 1.24%, closing at Rs 1052.75.
