Dodla Dairy Q3 Results Review - Likely Market Share Gains; Expect Margin Recovery In FY24: ICICI Securities

ICICI Securities Report

In-spite of multiple macro headwinds such as higher milk procurement prices, higher skim milk powder prices and muted flush season, Dodla Dairy Ltd. reported sturdy performance in Q2 FY23. Considering the peer group performance, we believe Dodla has likely gained market shares in Q3 FY23.

While higher milk procurement prices will likely continue to hurt margins in H1 CY23, we model margin recovery in FY24. Increase in hotel-restaurant-cafe sales and normalised out-of-home consumption are also leading to strong growth (more than 10%) of added products. We model Dodla to report profit after tax compound annual growth rate of 19% over FY22-25E 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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