Dodla Dairy reported a 17.4% revenue increase to Rs 1,196 crore for Q2 FY27, driven by higher procurement volumes and product pricing. Despite strong top-line growth, margins faced pressure from elevated raw material costs and increased logistics expenses, resulting in a 5.4% EBITDA margin. Management has provided a positive outlook, anticipating a margin expansion to 7.5%–8% in H2 FY27 as procurement prices stabilize and cost-pass-through measures take effect.
Dodla Dairy Q2 Results: Revenue Growth Meets Margin Headwinds
Revenue grew 17.4% YoY to Rs 1,196 crore in Q2 FY27; EBITDA margins narrowed to 5.4%.
Reader Takeaway: Strong volume growth and expansion into Maharashtra support revenue, but high procurement costs remain a profitability hurdle.
What just happened
Dodla Dairy has announced its Q2 FY27 financial results, reporting a healthy top-line of Rs 1,196 crore. While the company saw robust revenue growth, its profitability was constrained by rising input costs, with PAT for the quarter standing at Rs 37 crore. The company also announced a new 40% stake joint venture with Meadow India Holdings for the B2B dairy ingredients segment.
Why this matters
The core of the current investor narrative for Dodla Dairy is the tension between volume growth and margin volatility. While the company successfully grew milk procurement volumes by 9.3% YoY to 21.3 lakh liters per day, the rising cost of raw milk—which jumped to Rs 43.2 per liter—squeezed operating margins. Investors are looking to the management’s guidance of 7.5% to 8% EBITDA margins in H2 as a signal that the worst of the cost inflation has passed.
Strategic Developments
The company is aggressively pursuing expansion, with the Maharashtra facility liquid milk operations set for a March/April 2027 start. Additionally, the Africa business showed significant strength, growing 56% YoY to reach Rs 179 crore in revenue. The balance sheet remains healthy, with Rs 659.4 crore in cash and bank balances to support these growth initiatives.
Risks to watch
The primary risk remains the ability to pass on costs to consumers without hurting demand. Management noted that packaging and logistics costs, exacerbated by inflationary pressures, remain an overhang. Furthermore, the performance of the OSAM subsidiary, which recorded a slim 1% EBITDA margin, will be a key metric for analysts to track in upcoming quarters.
What to track next
Watch for the successful commissioning of the Maharashtra facility and any further updates on the B2B joint venture. Investors should also monitor procurement prices in Q3 and Q4 to confirm if the company’s expectation of cost stabilization holds true.