Dodla Dairy reported a 44.3% decline in quarterly net profit to ₹36.59 crore, as rising milk procurement costs outweighed a 17.4% growth in operational revenue. While margins faced pressure due to higher input costs, the company saw growth in curd sales and international operations, and announced a new joint venture to expand its B2B ingredient business.
Dodla Dairy recorded a 44.3% decline in net profit for the second quarter, coming in at ₹36.59 crore. This sharp drop occurred even as the company saw its revenue from operations grow by 17.4% year-on-year to ₹1,196.02 crore. The results highlight the difficult balance dairy companies face when raw material prices rise faster than the prices they can charge to customers.
Cost Pressures and Margin Squeeze
The primary reason for the profit decline was a spike in milk procurement costs. The company reported that the price paid to procure milk rose by 15.7% to ₹43.2 per litre. In contrast, the company was only able to increase its realization price—the amount it earns per litre from sales—by 8% to ₹61.9 per litre. This mismatch created a significant squeeze on profit margins. Other factors, such as a 41.6% increase in packing material costs and higher labor expenses, also put pressure on the company’s bottom line.
Management noted that a price hike of ₹2.5 per litre introduced late in the quarter provided only limited support to the financials. Additionally, the timing of the festive season, which shifted demand from the second quarter into the third, affected the quarterly figures. Despite these headwinds, the company reported positive volume growth, with milk procurement reaching 21.3 lakh litres per day.
Strategic Expansion and Operational Highlights
Looking toward new revenue streams, the board has approved a joint venture with Meadow India Holdings Ltd. Dodla Dairy will hold a 40% stake in this new partnership. The venture focuses on marketing and selling dairy ingredients to institutional clients, helping the company grow its business-to-business presence. This deal is pending final contract signatures and regulatory approvals.
Despite the domestic margin challenges, certain operational segments remained strong. Curd sales volume rose by 23%, and the company's international business—specifically in Kenya and Uganda—recorded a 55.9% increase in revenue. These international gains helped offset some of the domestic pressures.
Investors will likely watch whether the company can effectively manage procurement costs in the coming quarters and how quickly the market accepts further price increases. The speed at which the new joint venture begins contributing to revenue will also be a factor to monitor as the company looks to diversify beyond its traditional dairy products.