Parag Milk Foods Q1FY24

Parag Milk Foods, a leading manufacturer and marketer of dairy-based branded products in India, announced its unaudited financial results for the Q1FY24.

Key Highlights Consolidated Q1 FY24:

• Revenue stood at INR. 7496 million; a growth of 8.5% YoY

• Gross profit stood at INR 1,604 million, with a Gross profit margin of 21.4%

• EBITDA stood at INR 465 million, with an EBITDA margin of 6.2%

• Profit After Tax stood at INR 214 million, a growth of 109% YoY.

FY24 started on a positive note, with growth across categories and channels. Total income from operations stood at INR 7,496 million, registering an increase of 8.5% Y-o-Y. The focus on core categories of Ghee, cheese, and new age business – Avvatar and Pride of Cows remain high, and it would continue to invest in marketing and brand-building initiatives.

During the quarter, the company collaborated with Starplus for IPL integration, creating a unique impact-led branding activity for its Go Cheese brand.

The milk procurement prices are stabilizing, led by steady demand and the early onset of the flush season, resulting in the quarter's margin expansion.

Devendra Shah, Parag Milk Foods chairman, said, “We have posted decent revenue growth of 8.5% YoY to INR 7496 million led by healthy volume growth. Portfolio optimization efforts and stable procurement pricing enabled us to expand our Gross margins by 620 basis points YoY. We are pursuing market share gain across categories, investing in various capabilities, and expanding our retail network. In the future, on the back of a softening input cost environment and with the onset of the festive demand, the growth momentum is expected to accelerate, and we expect to deliver healthy profitability”.

Core categories: Core categories of Ghee and cheese have seen continuous traction throughout the quarter and have posted a growth of 22.9% Y-o-Y.

New age business - Brand Avvatar: The protein portfolio continued its momentum and recorded robust 116% growth YoY, led by 62% volume growth YoY. The protein portfolio continued to record market share gains.

Premium dairy business- Pride of Cows (PoC):  In line with the company’s premiumization agenda, Pride of Cows continues to witness healthy traction. The brand is aggressively expanding its product portfolio as well as distribution footprint. Recently, the brand entered the Bangalore market, and now the brand is present across six cities. The company is expanding its Bhagyalakshmi Dairy Farm (100% subsidiary), which supplies exclusively under the “Pride of Cows” brand, to over 15,000 cows by 2027. For Q1FY24, Bhagyalakshmi has posted revenue growth 21.2% YoY growth; with a 14.5% EBITDA margin.

Distribution reach: The overall business growth was broad-based, with all channels posting good growth. In line with its targeted initiative of expanding our retail space and presence, Parag continued to grow, expanded our ghee distribution reach by 37% YOY, and almost doubled our Cheese distribution reach on a YoY basis.

Brand building initiatives:  The company has strengthened its brand equity reach by adopting unique content-led impact marketing and branding campaigns. Continuing the momentum of marketing innovation, the company collaborated with Starplus on IPL to enhance visibility and awareness for Go Cheese.

Procurement:  The average milk procurement stood at 15 lac liters per day, a growth of 5% YoY. Aided by a stable global market coupled with the early onset of flush, milk prices have stabilized. For the quarter (Q1FY24), the average milk price stood at INR 37.7 per liter, down by 4.3% from the last quarter (Q4FY23).

New product launches – The company expanded the Avvatar portfolio by adding Mango Flavor - Avvatar Mango Rush. The company has also introduced various new products- Masala Tadka chass, plain, and mango lassi in pouches under fresh categories at only pocket-friendly price points of INR 10-15.   

New announcement- To constantly strengthen its internal policies, processes, and procedures, the company has engaged with Deloitte Touche Tohmatsu India as its internal auditors.

In the future, the company will continue to invest in its extensive distribution reach and outlet coverage, coupled with its innovative offering and portfolio premiumization.