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ICICI Securities Report
Dodla Dairy Ltd.’s revenues increased 40% YoY led by strong 20.3% growth in milk procurement and 51% higher revenues from added product. While the company’s Ebitda margin was lower by 367 basis points, we believe it has gained market shares in its core regions.
In our view market share gains are more discounted cash flow accretive than losing margins in one-two quarters. We also note the company has increased the prices in June 2022 and plans to raise prices again in Q2 FY23.
We model the margins to improve in H2 FY23 led by price hikes, cost saving initiatives and operating leverage. We model Dodla to report profit after tax compound annual growth rate of 17.6% over FY22-24E with:
high single-digit growth in milk procurement and market share gains and
distribution expansion.
We remain positive on Dodla due to its competitive advantages and strong growth opportunity in South India.
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