Parag Milk Foods Q4 FY26: New Age brands scale up as margins hold amid milk inflation

Parag Milk Foods closed Q4 FY26 with consolidated revenue of INR 945 crore, up 3% year on year. EBITDA rose 4% to INR 78 crore, while PAT increased 23% to INR 32 crore. The quarter was marked by an unusual combination: headline value growth came through even as volumes declined 5%.

For the full year, the company reported its highest-ever consolidated revenue of INR 3,818 crore, up 11% year on year. EBITDA increased 6% to INR 310 crore, and PAT bei rose 19% to INR 141 crore. Management described FY26 as a pivotal year where the company’s shift towards a more premium, protein-led portfolio began showing up in measurable outcomes.

Mix shift becomes visible in Q4

The Q4 business mix shows where growth is increasingly coming from. Core categories (ghee, cheese, paneer) remained the backbone at INR 535 crore, growing 7% year on year and contributing 57% of quarterly revenue. The New Age business, comprising Pride of Cows and Avvatar, delivered INR 100 crore revenue and grew 109% year on year, taking its mix to 11%.

Ingredients and SMP declined 13% to INR 143 crore, which management attributed to lower institutional demand and a planned reduction in SMP. Liquid milk was broadly flat to slightly down at INR 88 crore, and the “others” bucket declined 32% to INR 80 crore.

The volume decline in Q4 was explained as a base-effect issue. Management said the prior-year quarter included higher institutional and export sales, and exports were relatively lower in Q4 FY26. In core categories, the company still posted value growth of 7% despite a 3% volume decline.

Milk inflation, but Q4 gross margin improves

A key feature of the quarter was cost inflation in milk procurement. The company reported average milk prices at INR 42 per litre in Q4 FY26, up 15% year on year and 4% sequentially. Despite this, consolidated gross margin expanded to 28.0% from 26.7% a year ago, and improved sharply versus Q3 FY26 (25.9% as cited in management commentary).

Management attributed the Q4 resilience to a calibrated pricing and promotions strategy, alongside improved portfolio composition. The company also linked part of the sequential movement to earlier transitions, including the GST rate reduction from 12% to 5% in certain core categories, which had impacted pricing actions.

While Q4 showed margin expansion, the full-year picture was more mixed. FY26 gross margin declined to 26.7% from 27.5%, and EBITDA margin eased to 8.1% from 8.5%. The company’s narrative was that FY26 was a hyper inflationary commodity cycle, and the portfolio shift helped protect profitability even if it did not fully offset inflation through the year.

New Age business hits the INR 100 crore quarterly run-rate

The most notable structural change is the rapid scaling of the New Age business. Quarterly revenue for this segment climbed from INR 47 crore in Q4 FY25 to INR 100 crore in Q4 FY26, with INR 102 crore in Q3 FY26. On an annual basis, the company reported New Age revenue of INR 366 crore in FY26, up 91% year on year.

In the earnings call, management shared two additional data points. First, Avvatar’s estimated market share in quick commerce and marketplaces is around 14% to 15% in the protein segment, while noting that a meaningful portion of sales also comes from the company’s own website and retail, making total market share difficult to measure. Second, management expects the New Age business to contribute about 20% to 25% of overall revenue over the next 3 to 5 years, supported by new formats and product launches.

The company did not disclose category-level EBITDA margins, but management reiterated that the New Age business has materially higher profitability than the company average, based on earlier commentary.

Capacity expansion and capex outlook

Parag Milk Foods also indicated it is working on capacity expansion in cheese. Management said the plan is to increase cheese capacity from 60 metric tons per day to 80 metric tons per day, and potentially expand further using adjacent capex without requiring a greenfield project. The company did not share commissioning timelines, stating that it would update once installed and ready.

On capital expenditure, management guided FY27 capex of INR 60 crore to INR 70 crore, noting that dairy is capital intensive and that some projects involve multi-year spending. Management referenced investments including cheese capacity expansion and process improvements such as work related to lactose and whey.

The company also discussed its Dubai subsidiary. It confirmed that the subsidiary has been set up and the bank account was opened in Q4 FY26, but the first ODI had not been remitted. The stated purpose is to expand distribution reach in the Middle East through a company-owned depot approach while continuing to supply distributors.

What investors should track

FY26 ended with record revenue and improved PAT bei, but there are operational details to monitor. Cash flow from operations declined to INR 149 crore in FY26 from INR 212 crore in FY25, even as EBITDA rose. In the concall, management addressed inventory levels, stating inventory increased by around INR 150 crore largely due to rate variance linked to higher milk prices, and not due to channel inventory.

The company continues to position itself as a dairy and nutrition platform, with protein and premium dairy as cross-portfolio themes. Execution will likely be judged on three levers: sustaining gross margin improvement in an inflationary milk cycle, restoring consistent volume growth in core categories as base effects normalize, and scaling New Age revenue while protecting profitability as promotions and price points evolve.

Parag Milk Foods enters FY27 with a clearer portfolio mix, a fast-growing New Age engine, and an active capex agenda. The next phase will depend on how well these elements translate into steadier cash generation and continued margin stability in a volatile commodity environment.