Parag Milk Foods Limited: Churning Out Record Performance in Q2 FY26

Parag Milk Foods Limited, a prominent player in India's dairy FMCG sector, has announced a landmark performance for the second quarter of Fiscal Year 2026. The company has not only surpassed the significant milestone of INR 1,000 crore in quarterly revenue for the first time in its history, but also demonstrated robust growth across its key business segments. This achievement, reaching INR 1,008 crores in revenue, represents a strong 16% year-on-year (YoY) increase, underpinned by a solid 10% volume growth. Profit After Tax (PAT) for the quarter surged by an impressive 56% YoY to INR 46 crores, while EBITDA grew by 16% YoY to INR 89 crores, maintaining a healthy margin of 8.9%.

The first half of FY26 also reflects this positive trajectory, with revenue standing at INR 1,859 crores, a 14% YoY increase, supported by 8% volume growth. The company's Gross Profit Margin (GPM) for Q2 FY26 was 25.8%, an improvement from 23.6% in Q2 FY25, though it saw a sequential decline from 27.4% in Q1 FY26 due to gradual cost push. Despite an inflationary cycle in dairy commodities, with milk prices increasing 16% YoY and 2% sequentially, Parag Milk Foods has effectively managed to pass on these costs, showcasing strong brand pricing power and operational efficiencies.

Segmental Performance and Strategic Focus

The company's core categories, which include popular products like Ghee, Cheese, and Paneer, continue to be the backbone of its growth. These segments collectively witnessed a stupendous 14% volume growth and contributed approximately 61% to the total Q2 FY26 revenue. Gowardhan Ghee maintains its market leadership with a 22% share in the branded cow ghee segment, while Go Cheese holds a strong 35% market share in the cheese category.

A significant growth driver has been the 'New Age Business' segment, comprising premium brands like Pride of Cows and Avvatar Sports Nutrition. This segment recorded a robust 79% YoY growth in Q2 FY26, now contributing 9% to the company's overall turnover, up from 6% last year. Avvatar, in particular, has shown remarkable momentum, growing six-fold over the past three half-years. The company further expanded its offerings with the launch of the Avvatar Protein Wafer Bar, an innovative product designed to address protein deficiency through a convenient and tasty format.

Financial Summary (Consolidated - Q2 FY26)

Capital Structure Optimization and Market Outlook

Parag Milk Foods has also made significant strides in optimizing its capital structure. During Q2 FY26, the conversion of Foreign Currency Convertible Bonds (FCCBs) into equity, coupled with a fresh round of equity infusion in Q1 FY26, led to a substantial reduction in net debt. The consolidated net debt decreased by INR 125 crores during H1 FY26, bringing it down to INR 436 crores as of September 30, 2025. This deleveraging has positively impacted the company's gearing ratios, with Net Debt to EBITDA improving to 1.4 times and Net Debt to Equity to 0.4 times. This reflects a strong financial position, supported by healthy operating cash flows and efficient working capital management.

Management's commentary highlights a clear strategic vision, aiming for INR 10,000 crores in revenue in the medium term. They anticipate that approximately 20% of their portfolio will come from the health and nutrition business within the next 3 to 4 years, with an aspiration to achieve EBITDA margins in the low teens (13-14%) over the next 24 months. The company is actively strengthening its protein segment through in-house whey production, which not only ensures quality but also acts as an entry barrier for competitors. Furthermore, the expansion of Pride of Cows into new metros like Chandigarh and enhanced distribution across quick commerce platforms underscore their commitment to growth.

Q2 FY26 Revenue Mix

The company acknowledges the persistent inflationary cycle in dairy commodities but believes its strong brand equity and operational efficiencies will enable it to navigate these challenges. The management also expressed appreciation for the GST 2.0 reform, expecting it to enhance affordability and boost demand in the organized dairy sector. With a focus on distribution expansion, new product development, and brand-building initiatives, Parag Milk Foods is poised for continued momentum and sustained profitable growth.

Outlook: Sustained Growth and Strategic Clarity

Parag Milk Foods Limited's Q2 FY26 results demonstrate a company in strong growth mode, strategically expanding its high-margin segments while solidifying its core. The record revenue, robust profitability, and disciplined debt reduction efforts reflect effective management and a clear strategic direction. As the company continues to innovate in the health and nutrition space and leverage the shift towards organized dairy, it appears well-positioned to achieve its ambitious long-term goals and deliver sustained value to its stakeholders.