1. Opening Hook
Just when dairy bulls were dreaming of a creamy flush season, the heavens decided to overperform. Excess rains, milk shortages, butter exports, and suddenly Q3 looked less like a festive quarter and more like survival training.
In what was supposed to be the strongest procurement season, milk volumes fell 9% YoY. Yes, in a flush quarter. Meanwhile, butter flew overseas chasing global prices, leaving domestic players scrambling for fat.
Yet, revenue crossed ₹11,000 million for the third straight quarter. Value-added products kept marching. Ice cream is warming up before summer.
So was this just a bad monsoon hangover or something more structural?
Grab your steel glass of fortified milk — things get interesting as we decode the numbers.
2. At a Glance
- Revenue up 8% – Crossed ₹11,192 million; growth came, margins didn’t.
- Milk procurement down 9% YoY (Q3) – Flush season forgot it was flush.
- Procurement price up 9% – Farmers smiled, P&L didn’t.
- EBITDA at ₹629 million – Margin compressed ~180 bps; butter wasn’t kind.
- PAT at ₹346 million – Profits survived, barely flexed.
- Value-added revenue up 22.6% – Premiumization doing the heavy lifting.
- VAP mix at 38% vs 33.8% YoY – The makeover is real.
- Bulk fat down ~99% – No surplus milk, no commodity games.
3. Management’s Key Commentary
“Milk shortages and elevated procurement costs weighed on operating performance.”
(Translation: The flush quarter ghosted us 😏)
“For the first time in several years, YTD milk procurement declined marginally by 0.82%.”
(Three years of 9–10% growth. Then 2026 happened.)
“Milk procurement prices increased by 9% YoY, outpacing consumer price realizations.”
(We passed on ₹2.67 per litre. Costs rose faster. Math is cruel.)
“Value-added product revenues grew 22.6% YoY, contributing 38% of total revenue.”
(When raw milk misbehaves, paneer and curd step up.)
“Hyderabad ice cream plant trial production is underway.”
(Summer cavalry arriving on schedule 🍦)
“Ice cream business is growing strongly; Q3 growth at ~21%.”
(Rains couldn’t melt that momentum.)
“Margins will progressively normalize supported by supply and VAP mix.”
(Provided weather, farmers, and butter cooperate 🙃)
The call repeatedly circled back to climate volatility. Excess rainfall led to animal stress, mastitis infections, and productivity dips. Cross-breed cattle saw yield declines. Not just one state — across nine.
Interestingly, while procurement fell, sales were maintained. This meant no surplus milk for butter or bulk fat. Hence, zero commodity upside. Instead, the company bought butter at elevated prices to meet ghee demand.
Meanwhile, marketing spends rose from 1.2% to 1.8% of revenue — management calls it a “timely investment.” Investors call it “hope with invoices.”
4. Numbers Decoded
Metric Q3 FY26 YoY Change What It Means
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Revenue ₹11,192 mn +8% Topline resilient
Milk Procurement 16.73 LLPD -9% Flush malfunction
Milk Sales Volume 11.94 LLPD +2.1% Demand steady
Avg Milk Realization ₹57.31/ltr +4.9% Partial pass-through
Procurement Cost (Dec exit) ₹46.01/ltr Rising Pain not over yet
EBITDA ₹629 mn Margin -180 bps Cost squeeze
PAT ₹346 mn Flat-ish Survived, not thrived
VAP Revenue Contribution 38% +420 bps Mix upgrade intact
Butter Inventory 390 tonnes Minimal cover No fat cushion
Milk cost inflation outpaced pricing power. VAP growth cushioned but couldn’t fully offset. Operating leverage missing due to weak volume growth (~low single digits).
5. Analyst Questions
Q: Is milk shortage one-off or recurring?
A: Excess rainfall caused productivity stress. Mini flush expected May onward. Climate risk is now “palpable.”
Q: EBITDA 7–9% target still valid?
A: It’s a “targeted range,” not guidance. Subtle difference, very corporate.
Q: Why slow VAP growth?
A: Weather softer by ~1°C vs 10-year average. Curd and drinkables felt it. Summer should help.
Q: Any risk of milk shortages impacting sales?
A: Management says no. SMP stock available. They’ll “find milk.”
Q: Peers not hiking prices —
