1. At a Glance
Parag Milk Foods delivered 12% YoY sales growth and 9% PBT growth in Q1 FY26. Margins are back to 7%, and the company has stabilized operations post the FY22 debacle. But is it enough to justify the recent rerating?
2. Introduction with Hook
If Indian dairy were a Bollywood drama, Parag Milk would be the underdog trying to win the National Award. It has cows, cheese, whey protein, and… trust issues with the market.
- Once posted ₹-532 Cr loss in FY22, now back to ₹119 Cr PAT in FY25
- ROCE has climbed back from the grave (9% → 14%)
- Operating margins? Slowly ageing like fine Gouda
The company may sell Gowardhan Ghee, but investors are asking — where’s the butter on the bread?
3. Business Model (WTF Do They Even Do?)
Parag Milk isn’t your typical “doodh-dahi” brand.
They’ve vertically integrated the dairy supply chain across fresh milk, ghee, paneer, cheese, whey, flavored milk, and even branded cow milk under Pride of Cows (that gets delivered in Mercedes vans, FYI).
Key Brands:
- Gowardhan – Ghee, paneer
- Go – Cheese, dahi, flavored milk
- Pride of Cows – Premium subscription cow milk
- Avvatar – India’s 1st B2C whey protein brand
They’re not selling raw milk — they’re building FMCG-style brands out of it.
4. Financials Overview
FY25 (vs FY24):
- Revenue: ₹3,432 Cr → ₹3,526 Cr
- EBITDA: ₹253 Cr → ₹263 Cr
- PAT: ₹119 Cr → ₹119 Cr (flat)
- OPM: Stable at 7.4%
Q1 FY26:
- Revenue: ₹852 Cr (+12% YoY)
- EBITDA: ₹58 Cr
- PAT: ₹28 Cr
- EPS: ₹2.31
Revenues are growing, but profits are playing hide and seek. This is what happens when milk procurement prices rise faster than your MRP.
5. Valuation
Current Market Cap: ₹2,894 Cr
TTM PAT: ₹119 Cr
EPS TTM: ₹9.98
P/E: 24.2x
Book Value: ₹85.7 → P/B: 2.85x
Fair Value Range Estimate:
| Valuation Method | Assumption | FV Estimate |
|---|---|---|
| PE 15x (Base case) | ₹120 Cr PAT | ₹1,800 Cr → ₹150/share |
| PE 20x (Bull case) | ₹130 Cr PAT | ₹2,600 Cr → ₹215/share |
| DCF (10% CAGR, WACC 12%) | 5-year view | ₹230–₹250/share |
Conclusion:
Currently priced to mild optimism. Not expensive, not cheap — just like your favorite artisanal cheese.
6. What’s Cooking – News, Triggers, Drama
Recent Developments:
- Appointed 3 Independent Directors (Hello, corporate governance boost!)
- Q1 FY26 results: Revenue up 12%, PBT up 9%
- Completed capex in cheese & whey protein expansion
Triggers:
- Exporting whey to the US and EU
- Recovery in hotel/catering demand (post-COVID)
- Potential listing of Pride of Cows as a premium spinoff?
Drama:
FIIs are still cautious. Institutional trust in dairy companies post Prabhat/other meltdowns has been shaky.
7. Balance Sheet
| Particulars (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | 117 | 119 | 119 |
| Reserves | 691 | 793 | 904 |
| Borrowings | 606 | 645 | 654 |
| Total Assets | 1,668 | 1,887 | 2,033 |
Key Points:
- Debt-to-equity ~0.6x — manageable
- Asset base growing, mostly due to capex in cheese and automation
- No red flags, just the smell of old milk loans
8. Cash Flow – Sab Number Game Hai
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Cash from Ops | -190 | 99 | 212 |
| Cash from Investing | -88 | -53 | -132 |
| Cash from Financing | 212 | -49 | -78 |
| Net Cash Flow | -66 | -3 | 1 |
Takeaway:
Operational turnaround visible. They’re now generating positive cash from ops, finally putting money where the milk is.
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 9% | 11% | 14% |
| ROE | 4.5% | 7.6% | 12.3% |
| Debtor Days | 21 | 28 | 28 |
| Inventory Days | 100 | 105 | 83 |
| CCC (Cash Cycle) | 95 | 96 | 74 |
Verdict:
Parag’s numbers are maturing like blue cheese. Still sticky, but finally trending the right way.
10. P&L Breakdown – Show Me the Money
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 2,893 | 3,139 | 3,432 |
| EBITDA | 120 | 198 | 253 |
| EBITDA Margin % | 4.1% | 6.3% | 7.4% |
| PAT | 53 | 91 | 119 |
| PAT Margin % | 1.8% | 2.9% | 3.4% |
The turnaround is real. From a ₹532 Cr loss in FY22, they’ve clawed their way back into profit territory.
11. Peer Comparison
| Company | P/E | ROCE | OPM % | PAT Margin | Mcap (Cr) |
|---|---|---|---|---|---|
| Hatsun Agro | 70.8 | 13.3 | 11.9% | 3.4% | 21,450 |
| Dodla Dairy | 31.1 | 26.6 | 9.4% | 6.8% | 8,018 |
| Heritage Foods | 25.3 | 25.3 | 7.2% | 4.2% | 4,462 |
| Parag Milk | 24.2 | 14.0 | 7.4% | 3.4% | 2,894 |
Conclusion:
Parag sits in the mid-pack. Not the most premium, not the cheapest — but with room to grow if margins hold.
12. Miscellaneous – Shareholding, Promoters
| Category | Sep 22 | Jun 24 | Jun 25 |
|---|---|---|---|
| Promoters | 36.2% | 42.6% | 42.6% |
| FIIs | 13.0% | 10.1% | 9.2% |
| DIIs | 4.2% | 7.1% | 6.9% |
| Public | 46.5% | 40.0% | 41.2% |
Key Notes:
- Promoter stake increased – confidence booster
- FIIs still cautious
- Over 1 Lakh shareholders → rising retail love
13. EduInvesting Verdict™
Parag Milk has made a respectable comeback from the FY22 crisis:
- Margins normalized
- Capex utilized well
- Cheese biz scaling
- Whey biz gaining traction
But…
- Debt is still there
- Profitability needs further consistency
- Industry pricing power is weak
Verdict:
Parag Milk has moved from spoilt milk to semi-aged cheddar. Still needs to be refrigerated (monitored), but it’s finally edible again.
Metadata
– Written by EduInvesting Team | 22 July 2025
– Tags: Parag Milk Foods, Dairy, Cheese Market, FMCG, Avvatar, Q1 FY26, EduInvesting Premium
