India’s dairy company records 23% revenue growth in Q2FY27 as demand for value-added products strengthens its market position.
Indian dairy company Parag Milk Foods Limited has reported strong financial performance for the second quarter of FY2027, supported by higher sales volumes, improving demand for value-added dairy products and a favourable product mix. The company’s revenue increased 23% year-on-year to ₹1,241 crore, while its board approved a capital investment of ₹205 crore to expand paneer and cheese manufacturing capacity.
The results highlight the growing importance of value-added dairy products in India’s organised dairy market, where branded players are benefiting from changing consumer preferences and the gradual shift away from unorganised milk and dairy product suppliers.
Revenue Growth Supported by Value-Added Dairy Products
Parag Milk Foods recorded revenue of ₹1,241 crore during Q2FY27, compared with ₹1,008 crore in the corresponding quarter of the previous financial year. The growth was supported by a 12% increase in sales volumes and stronger contributions from higher-value product categories.
For the six months ended September 30, 2026, the company reported revenue of ₹2,185 crore, representing an 18% year-on-year increase. Volumes during the period grew by 8%.
Its flagship product categories, including ghee, cheese, paneer and curd, generated combined revenue of ₹778 crore during the quarter, accounting for approximately 63% of total revenue. The segment recorded 20% value growth and 7% volume growth.
The company’s New Age business, comprising Pride of Cows and Avvatar, also delivered strong performance. Revenue from this segment increased 71% year-on-year to ₹154 crore, raising its contribution to total revenue to 12%, compared with 9% a year earlier.
Financial Performance Shows Improving Margins
The company’s profitability improved alongside revenue growth, reflecting stronger operating performance and its ability to manage rising milk procurement costs.
| Financial Metric | Q2FY27 | Q2FY26 | Growth |
|---|---|---|---|
| Revenue | ₹1,241 crore | ₹1,008 crore | 23% |
| Gross Profit | ₹323 crore | ₹260 crore | 24% |
| Gross Margin | 26.0% | 25.8% | +20 bps |
| EBITDA (excluding one-offs) | ₹101 crore | ₹74 crore | 37% |
| EBITDA Margin | 8.1% | 7.3% | +80 bps |
| Profit After Tax | ₹42 crore | ₹29 crore | 42% |
Gross margins improved to 26%, while EBITDA excluding one-off items increased 37% to ₹101 crore. The EBITDA margin expanded to 8.1% from 7.3% in the previous year’s corresponding quarter.
Profit after tax increased 42% to ₹42 crore, despite higher current tax expenses.
The company also reported that milk procurement costs increased from ₹38 to ₹45 per litre. However, gross margin per litre improved from ₹14 to ₹17, indicating stronger realisations and a more favourable product mix.
₹205 Crore Investment to Expand Paneer and Cheese Capacity
To address growing market demand and existing manufacturing constraints, Parag Milk Foods’ board approved a combined capital expenditure of ₹205 crore for expanding paneer and cheese production.
The planned investments include:
| Product | Existing Capacity | Planned Capacity | Investment | Target |
|---|---|---|---|---|
| Paneer | 20 MT/day | 80 MT/day | ₹100 crore | June 2027 |
| Cheese | 60 MT/day | 120 MT/day | ₹105 crore | Q2FY28 |
The fourfold expansion in paneer production capacity is expected to strengthen the company’s ability to serve increasing demand for branded paneer products.
Meanwhile, doubling cheese capacity could support further growth in retail and institutional markets, particularly the hotel, restaurant and catering (HoReCa) segment, where the company has recorded double-digit growth.
The expansion reflects the company’s strategy of strengthening its presence in India’s organised value-added dairy market.
New Age Dairy Business Strengthens Growth Strategy
Pride of Cows and Avvatar have emerged as important contributors to Parag Milk Foods’ growth strategy. Their combined revenue increased 71% to ₹154 crore during Q2FY27.
The segment’s rising contribution highlights growing opportunities in premium dairy products and specialised nutrition categories.
As consumer demand evolves, branded dairy companies are increasingly focusing on differentiated products, quality positioning and stronger distribution networks to improve market penetration and profitability.
Parag Milk Foods is also seeking operational efficiencies through the proposed amalgamation of its wholly owned subsidiary, Bhagyalaxmi Dairy Farms, with the company.
Outlook for India’s Organised Dairy Industry
Parag Milk Foods’ latest financial performance reflects the increasing importance of value-added products in India’s dairy industry. Strong demand for paneer, cheese, ghee and specialised nutrition products is encouraging organised manufacturers to invest in additional processing capacity.
However, rising raw milk procurement costs and higher working capital requirements remain important considerations. The company’s net debt increased to ₹678 crore from ₹484 crore in March 2026, partly reflecting working capital requirements.
The planned capacity expansion will therefore be important in determining how effectively the company converts demand growth into higher production volumes and profitability.
With its investment in paneer and cheese manufacturing, expanding premium product portfolio and improving operating margins, Parag Milk Foods is positioning itself to capture further opportunities in India’s growing organised dairy sector.
