Parag Milk Foods, the maker of Gowardhan ghee, Go Cheese and Avvatar whey, posted its highest-ever quarter: revenue of ₹1,241 cr, up 23%. Milk costs rose 18%, yet it earned more per litre than a year ago.
Our notes from the presentation and the concall are below, but before that:
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India’s only whey protein maker grew this business 71%
Q2 FY27 in numbers (consolidated)
- Last year had a one-off. Q2 FY26 included a ~₹16 cr gain: a forex mark-to-market charge was reversed once foreign-currency bonds converted into shares. Remove it, and profit grew 42%.
- The company now pays tax. Current tax started this year, which is why PAT grew slower than PBT.
- Half-year view: H1 revenue grew 17.5% to ₹2,185 cr. PAT excluding the one-off grew 11.9% to ₹64 cr, but the PAT margin slipped to 2.9% from 3.1%.
Per-litre economics: passing on the cost
- Milk got much more expensive. It cost ₹7 more per litre, but revenue per litre rose ₹10. Two price hikes during the quarter and a richer product mix did the work.
- Volume: procurement was 21 lakh litres a day, up 5%.
- Cost pressure isn’t easing. Milk is now ₹46.5 a litre. Management expects no usual winter softening this year because of poor rains and drought, though it also doesn’t plan further price hikes soon.
Growth break up
- Flagship growth was mostly price. Volumes grew only 7% against 20% value growth. Volumes were down about 2% in Q1, so this is a recovery.
- Ingredients did more than they usually do. This B2B segment drove nearly 30% of the growth, but it grew just 1% a year from FY22 to FY26. Management credits a shift from skimmed milk powder to higher-value milk protein and lactose. Whether that holds is a key question.
- New Age keeps scaling. It is now 12% of revenue, up from 4% two years ago, and runs at more than ₹600 cr a year. Avvatar is India’s only whey protein brand made from domestic whey, and claims about 15% of online whey sales
Margins: better than they look?
- One-time ad spend: the CSO said about ₹20 cr of Q2 spending was extra, non-recurring brand investment (TV, the KBC sponsorship, influencers). Annual ad spend has stayed within ₹130–150 cr for three years.
- Adjusted margin: adding that back gives a Q2 EBITDA margin of about 9.7%, against the reported 8.1% (my calculation). Management didn’t confirm a “double-digit” margin when asked.
- Gross margin guidance: stable at 26–27%. New Age products should lift it over time, but inflation offsets that for now.
Capacity: paneer ×4, cheese ×2
- The paneer bet: management says about 70–80% of paneer eaten outside homes is unbranded or “analogue” (made with vegetable fats). States are now tightening rules on this, and the COO expects about 80% utilization right after the new capacity starts.
- Competition: Milky Mist is also expanding paneer capacity sharply. Management sees no price war, citing its brands and distribution.
- Whey goes with cheese: doubling cheese doubles whey output too, which feeds Avvatar.
- Restructuring: the board also approved merging Bhagyalaxmi Dairy Farms (the Pride of Cows farm subsidiary) into the parent
Regions and guidance
- Regions: West is 58% of sales (+26%), North 20% (+18%), South 14% (+31%), East 8% (+17%).
- Guidance: no number for FY27. Management targets high single-digit volume growth in core categories, and its long-term aspiration is ₹10,000 cr of revenue with New Age at about 25%.
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Ekansh Mittal
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