Dodla Dairy Limited reported a significant decline in profitability for the second quarter of financial year 2026–27, as rising milk procurement costs and input expenses outweighed strong growth in revenue and milk sales volumes. For the quarter ended September 30, 2026, the company’s consolidated net profit fell 44.3% year-on-year to ₹36.59 crore, compared with ₹65.67 crore in the corresponding quarter of the previous financial year.
Despite the decline in earnings, the dairy company’s consolidated revenue from operations increased 17.4% to ₹1,196.02 crore, reflecting higher sales volumes and continued expansion across its dairy operations. The results highlight a key challenge facing India’s organised dairy industry: translating increasing demand and procurement volumes into sustainable profitability amid persistent raw material inflation.
Revenue Growth Contrasts with Declining Profitability
Dodla Dairy’s financial performance reflected a widening gap between revenue growth and operating costs. Consolidated revenue rose from ₹1,018.82 crore in Q2FY26 to ₹1,196.02 crore in Q2FY27, while net profit declined substantially.
The company’s EBITDA fell 30.8% year-on-year to ₹64.2 crore from ₹92.8 crore. Consequently, the EBITDA margin contracted to 5.37%, compared with 9.11% a year earlier, representing a decline of approximately 374 basis points.
The pressure was also visible in the company’s expenditure. The cost of materials consumed increased 28.6% to ₹973.14 crore, substantially exceeding the 17.4% growth in consolidated revenue. Profit before tax declined to ₹50.57 crore from ₹82.77 crore in the year-ago quarter.
For the first half of FY27, consolidated revenue grew 18.2% to ₹2,394 crore, while profit after tax dropped 39.9% to ₹77.2 crore. The EBITDA margin for the six-month period declined to 5.4% from 8.7% in H1FY26.
Rising Milk Procurement Costs Pressure Dairy Margins
Higher milk procurement prices were a principal factor behind the quarterly earnings decline. Dodla Dairy’s average procurement price increased 15.7% year-on-year to ₹43.2 per litre, while its realisation price rose 8% to ₹61.9 per litre.
This difference indicates that the company’s milk procurement expenses increased faster than the prices it realised from sales. Although the company gradually implemented price increases, largely towards the end of the quarter, the adjustments were insufficient to offset the cost escalation fully during the reporting period.
Packaging expenses added to the pressure, with packing material costs increasing 41.6% year-on-year, according to the reported results. Higher input costs demonstrate how inflation across milk sourcing and packaging can affect dairy processors even when consumer demand and sales volumes remain strong.
The results underline the importance of balancing competitive consumer pricing with adequate returns for dairy farmers and sustainable margins for processors. The timing of milk price revisions, procurement efficiency and product mix will remain important factors influencing future profitability.
Milk Procurement and Sales Volumes Reach New Highs
Dodla Dairy recorded its highest-ever milk procurement volume of 21.3 lakh litres per day (LLPD) during Q2FY27, marking 9.3% year-on-year growth. Milk sales volumes increased 8.4% to 14.2 LLPD.
The increase in procurement and sales reflects continued operational expansion and the company’s ability to source and distribute larger quantities of milk. However, higher volumes alone did not translate into stronger earnings because procurement and other input costs rose faster than revenue.
Value-added products (VAP) remained an important part of the business. Sales from this segment reached ₹327 crore, accounting for 27.3% of total sales. Excluding bulk sales, the contribution of value-added products increased from 26% in Q2FY26 to 27.3% in Q2FY27.
This shift is strategically relevant for the dairy industry because differentiated products can offer opportunities to improve realisations and diversify beyond conventional liquid milk. Nevertheless, the profitability of such products depends on production costs, consumer demand, distribution expenses and the ability to maintain competitive prices.
International Operations and Animal Feed Business Expand
Dodla Dairy’s Africa business recorded 55.9% year-on-year revenue growth, supported by a 68.5% increase in milk sales and pricing initiatives in Kenya. Its Orgafeed business also delivered revenue growth of 39.9%, although higher raw material prices compressed margins in the animal feed segment.
These developments demonstrate the company’s expanding presence across complementary dairy and livestock-related activities. However, margin management remains important across both businesses as input-cost inflation can affect profitability beyond milk processing.
Joint Venture to Target B2B Dairy Ingredients
Dodla Dairy’s board approved a proposed joint venture with Meadow India Holdings Limited, under which Dodla will hold a 40% equity stake and Meadow India will own the remaining 60%.
The proposed venture will focus on marketing and selling dairy ingredients to India’s business-to-business market. The initiative could create opportunities to expand Dodla’s presence in the dairy ingredients value chain and serve industrial customers requiring dairy-based inputs.
The joint venture remains subject to the execution of the agreement, completion of necessary formalities and applicable regulatory approvals.
Outlook: Cost Control Will Be Critical
Dodla Dairy’s Q2FY27 results present a mixed picture for India’s dairy sector. Strong revenue growth, higher milk volumes and expanding value-added product sales indicate continued business momentum, but the steep decline in profit highlights the vulnerability of margins to procurement and input-cost inflation.
The company’s ability to improve price realisations, manage sourcing and packaging expenses, expand higher-value products and develop its B2B ingredients business will be important in the coming quarters. For the wider dairy industry, the results reinforce a central lesson: volume growth must be supported by effective cost management and sustainable pricing to deliver stronger earnings.
