DODLA - Dodla Dairy

📊 NSE: DODLA 🏢 Food - Processing - Indian 📅 Last Updated: 12/13/2025 21:37

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 2.1% YoY to INR 1,018.8 Cr in Q2 FY26. Segment-wise, Africa revenue grew 21.7% YoY and Orgafeed grew 28.3% YoY. The modest overall growth was due to a strategic shift away from bulk sales of Skimmed Milk Powder (SMP) and butter, which fell from INR 167 Cr to INR 28 Cr.

Geographic Revenue Split

The company operates in South India, Eastern India (via OSAM), and Africa (Uganda and Kenya). Africa contributes significantly to growth with a 21.7% YoY revenue increase in Q2 FY26. Standalone Indian operations maintain a procurement network of 19.5 LLPD.

Profitability Margins

Gross Profit Margin expanded by over 200 bps to 27.7% in Q2 FY26 from 25.5% in Q2 FY25. Net Profit Ratio improved from 5.29% in FY24 to 7.39% in FY25 due to higher value-added product (VAP) contribution.

EBITDA Margin

Consolidated EBITDA margin stood at 9.1% (INR 93 Cr) in Q2 FY26. While Orgafeed margins moderated to 13.7% from 17% due to maize price volatility, the overall margin is supported by the premiumization of the product mix.

Capital Expenditure

The company maintains a comfortable financial profile with low leverage. Recent major capital allocation includes the acquisition of OSAM Dairy (completed July 2025) and the implementation of SAP systems to drive operational efficiency.

Credit Rating & Borrowing

Upgraded to [ICRA]AA (Stable) from [ICRA]AA- (Positive) in March 2025. Short-term rating reaffirmed at [ICRA]A1+. Interest coverage is robust at 91.9 times as of FY23, reflecting minimal utilization of working capital limits.

⚙️ Operational Drivers

Raw Materials

Raw Milk (primary cost), Maize (primary for Orgafeed cattle feed), and packaging materials. Raw milk procurement costs increased by INR 1.00 to INR 1.50 per liter in Q2 FY26 due to erratic rainfall.

Import Sources

Procurement is localized: 19.5 LLPD from South India, 2.4 LLPD from Maharashtra, and direct procurement networks in Kenya and Uganda.

Key Suppliers

Direct procurement from a network of over 7,960 Village Level Collection Centers (VLCC) and thousands of individual farmers, reducing dependency on third-party aggregators.

Capacity Expansion

Consolidated aggregate installed capacity is 26+ LLPD (Lakh Liters Per Day) as of Q2 FY26. OSAM Dairy capacity is targeted to expand from 1.2 LLPD to 2.0 LLPD by FY27.

Raw Material Costs

Raw material costs are sensitive to seasonal 'lean' periods and rainfall. Management mitigates this by adjusting selling prices in line with industry norms and improving the product mix toward high-margin VAP.

Manufacturing Efficiency

Focus on improving OSAM's EBITDA margins from 2-3% to Dodla's consolidated 9-10% levels within 2-3 years through operational optimization and better capacity utilization.

Logistics & Distribution

Distribution is handled via 968 Dodla Retail Parlours, 3,360+ agents, and 2,600+ distributors. Freight costs rose 18% in Q2 FY26 due to the shift from bulk sales to liquid milk and VAP distribution.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Growth will be driven by: 1) Increasing VAP share (currently ~35% of revenue); 2) Scaling OSAM Dairy volumes to 2 LLPD by FY27; 3) Expanding the Africa footprint (21.7% current growth); and 4) Leveraging GST benefits and festive demand to drive liquid milk volumes.

Products & Services

Liquid Milk, Curd, Ghee, Lassi, Flavoured Milk, Ice Cream, Skimmed Milk Powder (SMP), Butter, and Cattle Feed (Orgafeed).

Brand Portfolio

Dodla Dairy, OSAM, Orgafeed, Lakeside Dairy (Uganda), Country Delight (Kenya).

New Products/Services

Expansion of the Value-Added Products (VAP) portfolio including premium curd and ice cream, which contributed to a 200 bps gross margin expansion in Q2 FY26.

Market Expansion

Strategic expansion into North Eastern India via the OSAM acquisition and market share capture in Kenya through strategic pricing.

Market Share & Ranking

Leading dairy player in South India with a growing presence in East India and East Africa (Uganda/Kenya).

Strategic Alliances

Acquisition of OSAM (HR Foods) to enter the Bihar/East India market. Associate partnership with Global VetMed Concepts (47.88% stake).

🌍 External Factors

Industry Trends

Shift in consumer preference toward branded dairy and VAP (curd, lassi). The industry is evolving from unorganized to organized procurement, where Dodla's 7,960+ collection centers provide a competitive edge.

Competitive Landscape

Competes with regional cooperatives and private players. Competitive advantage is maintained through a higher VAP mix (35%) and lower debt (TD/OPBITDA < 1.2x).

Competitive Moat

Moat is built on a deep 'Direct-to-Farmer' procurement network and a strong brand in South India. This is sustainable because it creates high entry barriers for competitors regarding milk sourcing and chilling infrastructure.

Macro Economic Sensitivity

Highly sensitive to food inflation and consumer purchasing power. Inflation in cattle feed raw materials (maize) directly impacts Orgafeed margins (4% drop in Q2 FY26).

Consumer Behavior

Increasing demand for high-margin value-added products and branded liquid milk in urban centers, driving the company's 22% 2-year PAT CAGR.

Geopolitical Risks

Operations in East Africa carry regional political and economic risks, though the business model mirrors the successful Indian integrated dairy model.

⚖️ Regulatory & Governance

Industry Regulations

Subject to food safety standards and dairy procurement norms. Compliance is managed through a strong internal control system and SAP-driven processes.

Environmental Compliance

CSR applicable with a turnover of INR 3,341.53 Cr and Net Worth of INR 1,282.23 Cr. Focus on Business Responsibility and Sustainability Reporting (BRSR).

Taxation Policy Impact

The company benefits from GST structures on dairy products; specific effective tax rate % is not disclosed in the snippets.

Legal Contingencies

The company has a grievance redressal mechanism in place for stakeholders; specific pending court case values in INR are not disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

Raw milk price volatility due to seasonal factors (lean season) and competition for milk procurement which can impact EBITDA margins by 1-2%.

Geographic Concentration Risk

Significant concentration in South India, though diversifying through OSAM (East India) and Africa (Uganda/Kenya).

Third Party Dependencies

Low dependency on third-party suppliers for milk due to the direct farmer network, but sensitive to commodity prices (maize) for the Orgafeed segment.