/** */

Dodla Dairy Q4 FY26: Record revenue, but margins under pressure

Dodla Dairy ended FY26 with its highest ever revenue, but the quarter also showed how quickly profitability can compress when procurement costs rise faster than retail prices. On a consolidated basis, Q4 FY26 operating revenue rose to Rs 1,074.5 crore, up 18.1% year on year, while FY26 revenue grew 10.9% to Rs 4,125.2 crore. The company also highlighted that it crossed Rs 1,000 crore of revenue in each quarter of FY26.

The trade-off in Q4 was visible in profitability. EBITDA fell to Rs 53.8 crore with a 5.0% margin, versus Rs 83.5 crore and 9.2% in Q4 FY25. Management attributed the decline to elevated milk procurement prices that were not fully passed on to consumers, alongside a higher cost base from advertising, transport and overheads.

At the bottom line, reported Q4 FY26 PAT was Rs 69.8 crore (6.5% margin), slightly higher than Q4 FY25 despite the EBITDA decline. However, the company was explicit in the earnings call that the reported PAT included one-off benefits. The CFO stated Q4 PAT included about Rs 29 crore of earlier tax credit and about Rs 10 crore of interest income linked to the tax refund, implying an underlying quarterly PAT of around Rs 40 crore.

What drove Q4 and FY26 performance

The quarter was volume-led. Management reported milk procurement of 18.5 LLPD, up 13.4% year on year, and milk sales at a record 14.0 LLPD, up 19.5% year on year. But the cycle remained difficult for the industry. The company’s own data showed realization price per litre in Q4 FY26 at Rs 58.40, up 4.0% year on year, while procurement price rose 9.7% to Rs 40.97. Management said it did not pass on the full inflation to maintain market share, which pressured gross margins.

Value-added products remained important but were impacted by mix and seasonality. Q4 FY26 VAP sales were Rs 296.9 crore, about 28% of total sales, compared with 31% in Q4 FY25. A key difference was the absence of bulk sales of skimmed milk powder and butter in Q4 FY26 (nil versus Rs 38.4 crore in Q4 FY25). Management also cited erratic rainfall affecting demand for certain VAP in select markets.

Diversification mattered in Q4. Management noted that the consolidated EBITDA margin of 5% was supported meaningfully by Africa and OrgaFeed, which together delivered around Rs 22 crore of EBITDA in Q4.

Financial summary (consolidated)

Note: Management stated Q4 FY26 PAT includes one-off items (earlier tax credit and related interest income).

Mix and segments: India dairy, Africa, OrgaFeed and OSAM

Dairy mix trends

Dodla’s dairy sales mix remained skewed toward liquid milk. In Q4 FY26, milk contributed 71% of dairy sales, curd 22%, other VAP 6% and bulk sales were nil. For FY26, milk contributed 70%, curd 21%, other VAP 7% and bulk 2%. The company noted that the mix data excludes the OrgaFeed business.

Management also discussed a longer-term ambition for VAP. In the call, it said it is targeting closer to 32% to 34% VAP contribution, led by products such as curd, paneer and ice cream, while acknowledging that some seasonality is structural in southern consumption habits.

Africa business

Africa continued to scale and was highlighted as a key diversification lever. Q4 FY26 Africa revenue was Rs 151 crore, up 48% year on year, largely driven by 63% year-on-year growth in milk sales volumes as the company priced strategically to gain share in Kenya. The business delivered its highest ever quarterly EBITDA of Rs 18.4 crore.

The call also offered an explicit medium-term aspiration: Africa is expected to scale toward 15% to 18% of consolidated revenue by FY28, supported by expansion plans in Uganda.

OrgaFeed

OrgaFeed reported FY26 operating revenue of Rs 164.4 crore and FY26 EBITDA of Rs 21.5 crore. For Q4 FY26, OrgaFeed revenue was Rs 41.6 crore and EBITDA was Rs 4.0 crore, with a 9.5% margin. Management said raw material prices rose faster than selling prices, compressing margins, and that it did not fully pass costs on in order to sustain farmer relationships.

OSAM (HR Food Processing) integration

OSAM, acquired as a regional dairy brand, is still in the convergence phase. Management disclosed OSAM revenue of Rs 81.9 crore and EBITDA of Rs 2.7 crore in Q4 FY26. For FY26, OSAM revenue was Rs 214.7 crore and EBITDA was Rs 4.8 crore. Management said it is implementing SAP, upgrading infrastructure, improving quality and streamlining logistics, and expects meaningful operational improvements over 6 to 12 months.

Expansion plans and capital allocation

Dodla presented an ongoing capex plan of Rs 5,900 million plus for FY26 to FY28, with over Rs 3,500 million already spent in FY26. The key projects are designed to expand processing capacity, widen the distribution footprint and improve the VAP mix.

Maharashtra greenfield project

The Maharashtra project remains central to the India growth plan. The investor presentation states planned total capex of Rs 2,800 million, capacity addition of 10 LLDP and commercial operations by end FY27. Management reiterated the timeline on the call and stated cumulative capex deployed across FY25 and FY26 was Rs 106 crore, with the balance of about Rs 180 crore planned to be spent in FY27. The plant is described as an integrated processing unit with initial focus on SMP and butter, followed by VAP expansion and cattle feed.

Uganda greenfield project

The company has acquired about 70 acres of land in Uganda and outlined a planned investment of Rs 600 million, with Rs 44 million invested in FY26. The execution timeline is by end FY29. The presentation outlines a phased approach: Phase 1 includes a diversified dairy portfolio and packaged drinking water, while Phase 2 expands into long-life milk, ice cream and milk powder production.

Capital allocation framework

Management also laid out a clear priority order for capital allocation in the call: first, fund growth capex from internal accruals for projects like Maharashtra and Uganda and regular capex; second, regular dividends; and third, selective bolt-on acquisitions where procurement or distribution synergies exist.

FY27 outlook: recovery expected, but treated as a transition year

Management’s near-term message was cautious but directional. For FY27, it expects revenue growth in the low to mid teens, supported by OSAM’s full-year contribution, continued Africa momentum and 8% to 9% organic growth in the India business. It also guided to a gradual gross margin recovery of 50 to 100 basis points over FY26 levels, as procurement normalizes and pricing actions take effect.

It also clarified that the effective tax rate should return to the normal 25% to 27% range after FY26, since the favorable tax order benefits are not expected to repeat.

The key variables to watch remain procurement cost normalization and the company’s ability to rebuild margins without losing market share. Management acknowledged uncertainties from fuel and packaging inflation and said it would be cautious on further price increases beyond minor corrections.

Key takeaways

Dodla Dairy delivered strong volume-led revenue growth in FY26 and sustained quarterly revenue above Rs 1,000 crore across the year. But Q4 demonstrated the downside of constrained milk supply: procurement inflation, partial pass-through and higher operating expenses compressed EBITDA sharply.

The positives were equally clear in management commentary: diversification via Africa and OrgaFeed supported consolidated profitability, OSAM is being integrated with a stated 6 to 12 month improvement window, and the company has defined capacity expansion plans with timelines. FY27 is positioned as a transition year, with the company expecting modest margin recovery and continued growth while navigating cost uncertainty.