Parag Milk Foods Q2FY24: Robust growth in revenue, margins and strong operating cash flows

Parag Milk Foods (PMFL), a leading manufacturer and marketer of dairy-based branded products in India, announced its unaudited financial result for the quarter and Half year ended 30 September 2023. 

Key Highlights Consolidated Q2 FY24: 

• Revenue stood at INR. 7,981.6 million, a growth of 20.1 % YoY 

• Gross profit stood at INR 1,834.3 million, with a Gross profit margin of 23.0 %

• EBITDA stood at INR 583.8 million, with an EBITDA margin of 7.3% 

• Profit After Tax stood at INR 251.9 million, a growth of 121.1% YoY. 

• Strong Cash Flow from Operations at INR 489.3 million 

The festive momentum started strong with healthy demand across the segments. The total revenue for the quarter stood at INR 7,981.6 million registering a growth of 20.1% YoY. Despite the high festive base of last year, the core categories continued to post healthy volume and value growth driven by innovative branding and an expanded distribution base.

Stabilizing procurement prices and improving the product mix resulted in a 220 basis point expansion in the Gross Profit Margin (GPM), which percolated to EBITDA margin expansion. The EBITDA margin for the quarter expanded by 160 basis points YoY and stood at 7.3%.  The overall business health remained strong; with PMFL posting a healthy Cash Flow from Operations of INR 489.3 million for 1HFY24.

The innovative brand integration with Kaun Banega Crorepati (KBC) has enabled PMFL to gain strong consumer connections and expand distribution reach. The company further strengthened the ties, by collaborating for the second time with KBC and is likely to result in better space in tier 2 & tier 3 towns & cities. As a strategic focus area, PMFL continues to invest in expanding its distribution reach and outlet overage. 

Devendra Shah, chairman said, “I am delighted to share a healthy revenue growth of 20.1% YoY to INR 7,981.6 million led by volume growth and our product premiumization drive. This growth is supported by healthy business profitability; our Gross and EBITDA margins have expanded by 220 and 160 basis points, respectively. It gives me pleasure to share that for the 1HFY24, the business has posted a strong Cash Flow from Operations of INR 489.3 million. 

Further, on the back of a softening input cost environment and with good festive demand we expect the growth momentum to accelerate. Given this backdrop, we are confident to show healthy growth in our profitability in the coming quarters as well.

We have also embarked on a business transformation drive by partnering with Boston Consultancy Group (BCG) to aid us in unlocking new avenues for growth and streamlining our operations for long-term sustainability”.

Core categories: Core categories of Ghee and Cheese have seen continuous traction throughout the quarter and have posted a growth of 6.2% Y-o-Y. 

New age business- Brand Avvatar: The Direct to Consumer (D2C) brand Avvatar continued its momentum and recorded robust 62.7% growth YoY, led by 57% volume growth YoY. The overall protein portfolio has 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 expanding its product portfolio as well as distribution footprint. 

Distribution reach: The overall business growth was largely broad-based with all channels posting good growth. In line with the targeted initiative of expanding the retail space and presence, PMFL continues to invest in the sales and distribution (S&D) infrastructure. 

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 the marketing innovation, the company continued its effective collaboration with Kaun Banega Crorepati (KBC) for the second time. The association has enabled the company to increase its consumer connect and strengthen brand equity.

Procurement:  For the quarter, the average milk procurement stood at 15 lac liters per day; aided by a stable global market and an excellent flush season, the milk prices have stabilized. The average milk price for the quarter stood at INR 35.6 per liter.