Milky Mist Dairy Food Ltd (MILKYMIST) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Milky Mist Dairy Food Ltd earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Devika Shah from Adfactors PR. Thank you, and over to you, ma'am.
Devika Shah (Adfactors PR): Thank you. Good morning everyone, and welcome to the Q2 FY27 and H1 FY27 earnings conference call of Milky Mist Dairy Food Ltd. Today, we have with us Mr. T. Sathish Kumar, Chairman and Managing Director; Dr. K. Rathnam, Whole-time Director and CEO; Mr. Biswajit Mishra, Chief Financial Officer. We will begin with the opening remarks from the management, followed by a Q&A session. Please note that this call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand over the conference to the management for their opening remarks. Thank you, and over to you, sir.
K. Rathnam (Milky Mist Dairy Food Ltd): Yeah. Good morning, Devika, and good morning everyone. I welcome you all to our Q2 and H1 FY27 earnings conference call. Thank you for your continued interest in support of Milky Mist, in and support of Milky Mist. We had a very, very successful Q2 FY
K. Rathnam (Milky Mist Dairy Food Ltd): 27 we achieved a significant milestone with revenue, EBITDA, and margins reaching new peaks during the quarter. During the quarter we continue to strengthen Milky Mist value-added product packaged food business while navigating a dynamic operating environment. Our efforts remained focused on diversifying our portfolio, expanding our market presence, and strengthening our operational capabilities to support the next phase of growth. We continue to balance growth opportunities with operational discipline keeping our long-term business objectives in focus. Allow me to throw some light on the industry environment that prevailed in the September quarter. During the September quarter 2026, the FMCG sector navigated a challenging and demand, challenging demand and cost you know environment. Retail inflation rose to 5.54% in September 26 while food inflation accelerated to 7.74% putting additional pressure on household budgets ahead of the festive season. Industry commentary also pointed to a slower than expected recovery in festive demand and the possibility of more moderate FMCG growth in H1 FY27. Input cost pressures also remained significant for food companies. Cattle feed costs were reported to be 100, 15 to 20% higher year-on-year in September, while while the milk prices in some markets were around 30% higher than the earlier year. These trends reinforced the importance of efficient procurement and disciplined cost management across the value chain. At Milky Mist our strong procurement ecosystem and stable demand of our products allowed us to navigate this situation. Coming to the products in large, paneer continued to be a large lead category for Milky Mist in the September quarter as well, with year-on-year growth of 44%. The category witnessed a greater regulatory scrutiny especially on the analogue products and increased emphasis on product identification and food safety matters. Milky Mist was a clear beneficiary of this you know this situation as we are a very clean label products quality led branded paneer player across the country. Our current paneer production is 100 tonnes per day with an installed capacity of 150 tonnes per day. The current capacity utilization stands at close to 65%, but we still have a larger headroom to increase the production within our existing capacity. Our continued priority is to increase capacity utilization by expanding distribution, market expansion, and and strengthening the the brand brand position. Next to our, next next is our you know our protein-focused portfolio. We have been witnessing growing demand and interest in protein-rich foods as consumers become more and more conscious of their nutritional needs. As we know, we had introduced high-protein paneer cubes in Q1 FY27, extending our presence in the protein-focused segment. Cheese and curd segments offer huge opportunities to deepen our presence in the packaged products category. With regard to cheese, it grew at 34% year-on-year and curd segment grew by 22nd 22% year-on-year. Yogurt has been yogurt category has been the fastest growing category in Q2 FY27 with a revenue growth of 168% on a year-on-year basis. In September 2026, we commissioned our new manufacturing facility to manufacture Skyr and Greek yogurt at Perundurai plant. Built with an investment of 40 crores, the facility uses latest ultrafiltration technology, increasing the current capacity from 20 tonnes per day up to 180 tonnes per day. We strengthened our ability to scale high-protein yogurt portfolio to meet this demand. Currently we manufacture about 35 to 40 tonnes a day. For the convenience of the consumer, we have also introduced like like any other markets in Europe and other parts of the country, we have also introduced a pack of four with Skyr and Greek yogurt. This gives an option to the consumers to buy four packs at one go and take the protein to the level of 42 g per day consumption. To augment the protein category, recently we launched high-protein lactose-free milk in October 2026. The 250 ml pack contains 25 g of protein. Together with high-protein paneer, high-protein cheddar cheese, high-protein milk, and high-protein yogurt category, these products gives us a broader presence in the protein-focused segment. Protein category had emerged as one of the fastest growing segment as far as Milky Mist is concerned and across the country and contributed to the overall sales
K. Rathnam (Milky Mist Dairy Food Ltd): give our sales and volume mix to the extent of 12% to 13% of our top line sales. As you are all aware, protein market in market size in India is currently valued at 31,000 crore, growing at a 18% CAGR. It will reach something like a 150 to 160,000 crores by by 2036. As per since Milky Mist has invested well ahead of the time with a capacity of around 150 to 180 tonnes per day, we are at the sweet spot harnessing this demand with our agile strategic efforts. We are also expanding our consumer reach, and our distribution network remains a key priority for us. Our focus goes beyond increasing the number of retail outlets to ensuring wider product availability, improving market penetration, and enhancing the productivity of our distribution network. We continued to implement this approach during the year, and now we have close to 4 lakh retail touchpoints across the country, 4,200 distributors supported by over 45,000 visi coolers and freezers. Our distribution architecture has general trade as a foundational base. However, quick commerce has emerged as a strong channel, and we are focused towards toward expanding this in a margin, you know, margin building way. Our online channels contributed 21% of revenue in H1 FY '27, compared with 11% in H1 FY '26, reflecting the growing contribution of digital platforms to our overall business model. When we're talking about geographical mix, our South India contributed to be our continued to be our largest market, contributing nearly approximately 70% of our revenue in H1 FY '27. Tamil Nadu was the leading state with sales contribution of approximately 26%, followed by Karnataka, 23%. While South India remains our core market, we continue to focus on expanding our presence and increasing our contribution from other parts of the country. To increase our penetration in Western and Central India, as informed earlier, we have acquired 50 acres of land in Baramati, Maharashtra, and we are in the process of designing, development and approval stage to set up a facility which will operate which will be operationalized in in in three years from now. We will continue to our efforts to explore other opportunities to further strengthen our ability to serve markets more effectively while while aligning our infrastructure, product portfolio, and distribution strategy with regional demand. When we are talking about the procurement and manufacturing utilization, our procurement ecosystem remains a very key strength to the company. During H1 FY '27, we procured 24., sorry, 246.5 million liters of milk with 31% volume growth from H1 FY '26. We're able to maintain the volume growth in spite of unfavorable conditions such as extended summer, deficit in rains in certain parts of the country. While that was an advant disadvantageous situation, Milky Mist continued to expand, you know, milk procurement network, and we were able to procure more than 30% volume growth, you know, during this current financial year of H1 FY '27. As of Q2 FY '27, we have a network of over 92,000+ farmers, expanding sourcing networks, strengthening our ability to ensure a reliable supply of quality milk and support the growth of our value-added product portfolio. As a value-added food business, our performance is driven by more than milk prices alone. Volume growth, product mix, and realizations across our categories play an important role in our revenue, and revenue growth and profitability. While we remain mindful of movements in milk price procurement costs, our focus is on calibrated pricing, efficient procurement operations, better utilization of our manufacturing capabilities, and strengthening the distribution system to sustain profitable growth going forward. As we expand, we will continue to strengthen our sourcing network and align procurement, production, and distribution to support the growing demand while maintaining product quality, operational efficiency, and profit margins as a whole. When we talk about H2 H1 and H1 financial performance, our turning to our financial performance, Q2 FY '27 delivered a very strong financial performance with revenues growth, gross profit improvement, and EBITDA margins reaching their highest-ever quarterly levels. Revenue from operations grew 41.6% year-on-year to 1,800- 1,089 crore in Q
K. Rathnam (Milky Mist Dairy Food Ltd): FY27 gross profit increased by 46.4% to 368.8 crores, with gross margins improving by approximately 112 basis points to 33.9%. Sales growth during the September quarter was supported by steady demand and increasing consumption across our value added dairy portfolio. Paneer, yogurt, and ice cream contributed to the sales mix and volume growth. Ice cream revenue increased by 43% year-on-year, benefited from the extended summer conditions. As I told you, yogurt category continue to grow at more than 160% levels. EBITDA rose from 53.9% year-on-year to 165.2 crores with EBITDA margin increasing to 15.2% from 14% in Q2 FY26. Increase in EBITDA and EBITDA margin on a year-on-year basis is mainly due to the operational efficiencies, higher volume growth, capacity utilization, and product mix. Profit after tax increased three fold to 77.9 crore compared with a 28.4 crore in Q2 FY26, taking PAT margin to 7.2% from 3.7% in the earlier previous quarter. The increase in reported PAT is mainly due to EBITDA expansion, repayment of loans and deferred tax asset recognized in accordance with applicable accounting standard. When we talk about the H1 performance, revenue from operations stood at 2,600 sorry, 2,062.9 crores, up by 42.5% year-on-year basis. Gross profit increased to 50.9% to 701.9 crores, while EBITDA including other income rose 62.9 crores to, sorry, 62.9% to 310 crore. EBITDA margin expanded to 15.03% from 13.2% in H1 FY26. Profit after tax increased to 142.6 crore from 34.9 crore, an increase of 308.4% with PAT margin reaching to 6.9% from 2.4% of H1 FY26. We remain focused on quality of our growth and efficient utilization of capital. Our ROCE stood at 16.1 annualized basis and ROE at 21.1 in H1 FY27. Net debt stood at 32.6 crores as of September 30. The net debt when I say the the the amount of debt we carry on the books and the amount of deposits we carry in the bank's post realization proceeds of the IPO the net debt is 32.62 crore. Our performance this quarter and H1 also reflected the resilience of our business model. In spite of inflationary pressures, the impact of El Nino and geopolitical uncertainties, we continue to deliver while improving profitability. Our focus on value-added categories, disciplined pricing, capacity utilization, and operational efficiencies has helped us navigate these challenges while maintaining a clear focus on profitable growth. As you all aware, paneer is the star product as far as Milky Mist is concerned which is with a with a value growth of 43% and a volume growth of 28% we have been growing year-on-year very steadily with increasing the consumption demand from the existing markets as well as penetrating into the newer market. This even though we have a 150 tons of paneer production capacity per day as on today with 100 tons capacity utilization and about 28% volume growth, we see the capacity you know reaching to the maximum level in in in a matter of 24 to 6 months 24 to 20 30 months' time. In order to augment our capacity being paneer is the star product, we are exploring the possibilities of putting another 200 tonnes per day paneer manufacturing facility at our Perundurai plant. The design developmental activities are under process and and with together with additional 200 tons, that manufacturing capacity will be 350 tons which will take care of the further growth until 2035. With regard to IPO proceeds utilization, we have already taken as we have indicated in the RHP, the utilization of the funds as per the projects identified in the RHP and the work is under progress. We have already issued purchase order towards this. Since Milky Mist has been growing
K. Rathnam (Milky Mist Dairy Food Ltd): 40% plus year-on-year since this year. And the last 5 years at a 30% CAGR. We see a larger opportunity going forward, becoming the largest player in the country. This indicates this puts us, this indicates that we need to strategize our growth pattern going forward, looking at other manufacturing facilities, both in terms of you know, either in in the form of you know, setting up of our own project at Maharashtra, own factory at Maharashtra, where we got already the land or obtaining certain you know contract manufacturing somewhere else. So with this mind with this aim in our mind, looking at the kind current growth, what we have at 40%, we expect the capacity utilization of this Perundurai plant to be to be a fully fully operational something like by 2030, so we need a second manufacturing facility with a very moderate in moderate investment in Maharashtra. So the work we have already commenced in terms of designing, development, and approval activities. We will let you know as and when we commence the, you know, the the actual you know, civil works and and placement of purchase orders. When we talk about the outlook, looking ahead, our priorities are very, very clear. Focus on all milk procurement volumes, product categories, that means expanding the product categories, increasing utilization of our existing capacities, deeper deepening deepening the consumer reach, expanding our presence in newer markets, and building our high protein range and other value-added products going forward. We see opportunities in the growth in the growing demand for nutritious products, the expansion of quick commerce channels, and the continued development of our farmer and retail network. Our investments in manufacturing, product innovation, and distribution provide a foundation for pursuing these opportunities going forward. As we move forward, the emphasis will be on execution, building demand for newer products, improving utilization of our manufacturing facilities, and expanding distribution in a disciplined manner. We will continue to balance growth and procurement efficiency, cost management, and careful use of capital to to remain to maintain the current growth pattern, current margins, and the capital utilization going forward. Thank you, once again, for your continued support and engagement. I look forward to your questions. And we will take your questions from now.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press "*" and "1" on the touchstone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mehul Desai from JM Financial Services Limited. Please go ahead.
Mehul Desai (JM Financial Services Limited): Hi sir. Good morning, and congratulation on you know, another stellar quarter. My my first question is basically if you could help us with, you know, the saliency of this 3-4 protein product that you highlighted. One is High Protein Lactose Milk, High Protein Cheddar Cheese, Yogurt, and, you know, High Protein Paneer. This four key SKU's, what is the saliency right now in 1H? And how do you see the, you know, saliency of this four products over next 2 to 3 years increasing? That's the first question. And also if you could tell us how are the margins in this four categories versus your base business? That's my first question.
K. Rathnam (Milky Mist Dairy Food Ltd): Yeah, thanks Mehul. Good morning. You see as I told you protein is the platinum of I wouldn't say it's a gold, it's a platinum of the thing today. As you all aware, the protein segment has been growing leaps and bounds on the with the realization of the consumers with regard to the protein requirement. As I told you, the protein market in India as on today is at 31,000, which is growing at 18% CAGR. Since Milky Mist has set up the plant well in advance in immediately after the COVID and continued in expanding this category, as you rightly said, launching of the high protein products such as milk, you know, Pro-milk, Yogurts, Skyr, and High Protein Paneer. Today, the revenue from these four products, this high protein category is at 12% from the of the top-line. We see this you know, we see this as one of the strong emerging category in the coming years, at least next 2 to 3 years. And
K. Rathnam (Milky Mist Dairy Food Ltd): the top line contribution would move from 12% at least we expect that to that to the level of 18 to 20% going forward. This is going to be one of the strongest you know growing category as far as Milky Mist is concerned apart from the strong growth coming from paneer and cheese and other categories. Okay. With regard to gross margins Biswajit can you respond to that? Yeah, yeah.
129 more turns of this transcript: log in to Stocksigma to read the full call.