Dodla Dairy Ltd reported a consolidated net profit of ₹40.64 crore for the quarter ended 30 June 2025, marking a 42 per cent sequential decline from ₹69.8 crore in the preceding quarter. Elevated milk procurement prices and a deliberate inventory buildup ahead of upcoming quarters weighed on margins, even as revenue climbed to a record high.

Revenue Hits Record Despite Margin Pressure

Consolidated revenue rose 19 per cent to a record ₹1,197.94 crore in Q1 FY27, reflecting strong volume-led growth across product lines. EBITDA improved to ₹64.9 crore from ₹53.8 crore in the previous quarter, suggesting operational gains even as net profit contracted sharply.

The company attributed the profit decline to two primary factors: higher raw milk costs driven by tight supply conditions, and a strategic decision to build inventory ahead of anticipated demand normalisation from Q2 FY27 onwards.

What the Management Said

Dodla Sunil Reddy, Managing Director of Dodla Dairy, said the inventory strategy aligns with broader industry trends. 'With extended summers, our VAP portfolio, including curd, buttermilk, lassi, and ice cream, delivered record sales, reaching about a third of our total sales,' he said in a regulatory filing.

Reddy added that the company expects milk procurement prices to begin normalising from the second quarter, which should support a recovery in profitability.

Milk Procurement and Operational Highlights

Dodla Dairy recorded its highest-ever milk procurement volume of 21.1 LLPD (lakh litres per day), representing 13 per cent year-on-year growth. The company noted that disciplined improvements in operational efficiency resulted in better Q1 FY27 operating margins compared to the full year FY26.

Employee costs rose 7.7 per cent sequentially — from ₹51.7 crore to ₹55.7 crore — and surged 18 per cent on an annual basis, partly driven by upward revisions in wages for off-roll employees in compliance with new labour laws.

Africa Business Delivers Strong Growth

The company's Africa operations posted revenue growth of 45.6 per cent year-on-year, largely driven by milk sales growth of 52.3 per cent YoY. This marks an increasingly significant contributor to Dodla's overall growth narrative, diversifying its revenue base beyond domestic markets.

Investment in Sids Farm

The Board of Directors approved a primary investment of approximately ₹11.6 crore for a 2 per cent stake in Sids Farm, a direct-to-consumer (D2C) dairy brand. The move signals Dodla's intent to gain exposure to the fast-growing premium and direct-to-consumer dairy segment.

With milk prices expected to ease and VAP volumes sustaining momentum, analysts will closely watch Q2 FY27 results to assess whether the margin recovery materialises as management has projected.