Dairy companies likely to record 11-13% revenue growth in FY26: Crisil Ratings

Indian dairy companies are projected to witness a revenue growth of 11-13% in FY26, according to a media release from ratings agency Crisil. This growth is driven by robust demand, increasing popularity of value-added products (VAP), and rising milk prices at the retail level. Profitability is also expected to improve by 20-30 basis points, supported by better realisations, healthy milk supply, and a favourable shift towards higher-margin VAP. Companies are set to increase capital expenditure by about 10% to capitalise on the growth momentum, with a significant portion allocated to enhancing capacities for VAP. This segment continues to outpace traditional liquid milk. Crisil’s analysis of 34 dairies, with cumulative revenue of Rs. 90,000 crore (US$ 10.54 billion) indicates that the VAP segment is expected to grow by 16-18% this fiscal year, driven by changing consumer tastes and rising nutritional awareness. This segment’s share in the product mix is set to increase to about 45% from around 40% a couple of years ago, while growth for liquid milk is expected to remain stable at about 10%.
The dairy industry will also benefit from a favourable monsoon forecast, stable fodder prices, and increased adoption of artificial insemination to boost productivity, ensuring steady availability of raw milk and limiting the increase in procurement prices to a modest 2-3%. This will support profitability, resulting in a 20-30 basis point improvement in operating margin to around 5.3%. Capital expenditure is expected to rise to Rs. 3,400 crore (US$ 398 million), with over 60% allocated to the VAP segment. Despite higher debt levels due to increased capex, credit profiles are expected to remain stable, supported by strong balance sheets and healthy cash accrual. A normal monsoon and a timely ramp-up of newly commissioned capacities will be crucial factors to watch.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.