Whey Protein, Premium Dairy and Clean Labels Drive Next Phase of Growth
Parag Milk Foods is accelerating its transition beyond traditional dairy, placing a stronger strategic emphasis on protein, premiumisation and clean-label nutrition, even as its core dairy categories continue to deliver double-digit growth.
This evolution reflects what executive director Akshali Shah describes as a long-term transformation rather than a tactical shift. “We’ve moved from being a dairy company to a multi-brand dairy company, then to FMCG, and now decisively into health and nutrition,” she said, highlighting the rapid scale-up of Avvatar, Parag’s whey protein brand.
Financial Performance Reflects Portfolio Strength
The company reported its highest-ever quarterly revenue of ₹1,008 crore in Q2 FY26, marking a 16% year-on-year increase, supported by 10% volume growth. For the first half of FY26, revenue reached ₹1,859 crore, up 14% YoY, while EBITDA rose 12% to ₹155 crore. Volume growth for the half-year stood at 8%, underscoring balanced expansion across categories.
Profitability also improved. Gross margin increased to 25.8%, compared to 23.6% a year earlier, while EBITDA margin edged up to 8.9%. Strong operating cash flows of ₹99 crore in H1 FY26 enabled Parag to reduce net debt by ₹125 crore, improving its net debt-to-EBITDA ratio to 1.4x.
Core Dairy Categories Remain the Growth Backbone
Despite its push into nutrition, Parag’s core dairy segments, ghee, cheese and paneer, remain the company’s primary revenue drivers, contributing 59% of total turnover. In Q2 FY26, these categories recorded 23% value growth and 14% volume growth, with annual growth rates continuing in the 22–25% range.
“Our core categories are still the largest contributors,” Shah noted, indicating that diversification into nutrition is additive rather than disruptive to the existing dairy business.
Avvatar Anchors Protein-Led Expansion
The most visible symbol of Parag’s strategic pivot is Avvatar, which has grown nearly six-fold over the past three years and now commands close to 10% market share in India’s whey protein segment. According to Shah, Parag is currently the only domestic manufacturer of whey protein in India’s sports nutrition market, offering a significant supply-side advantage.
This protein-led focus aligns with broader structural trends. India’s dairy market has expanded by around 70% over the past 11 years, making it the fastest-growing dairy market globally, while the country remains the world’s largest milk producer, accounting for nearly a quarter of global output.
Premium and Clean-Label Products Gain Momentum
Parag’s “new-age” businesses, Pride of Cows and Avvatar, now contribute 9% of overall revenue, up from 6% last year. In Q2 FY26, this segment recorded 79% year-on-year growth, reinforcing the company’s bet on premium, nutrition-focused offerings.
Shah attributes this momentum to evolving consumer preferences. Consumers are reading labels more closely. They are avoiding additives, emulsifiers and colours,” she said, adding that this shift now extends beyond younger demographics to older consumers as well.
Addressing India’s Protein Deficit
A key long-term driver for Parag’s nutrition strategy is India’s persistent protein gap. Shah pointed out that internal research conducted in 2016–17 showed 75–80% of Indians to be protein-deficient, with a large proportion following vegetarian diets. “Dairy becomes a critical protein source in such a context,” she said.
Looking ahead, Parag expects its new-age nutrition and premium businesses to contribute around 25% of total revenue within the next four to five years. Plans are also underway to expand Avvatar into ready-to-drink formats and protein snacks, targeting the growing demand for convenient, on-the-go nutrition.
International Expansion on the Horizon
To support its next phase of growth, Parag has established a subsidiary in Dubai, targeting markets across the Gulf and East Africa. The company expects initial traction over the next 18 months, positioning international markets as an additional growth lever.
Even as milk procurement prices remain firm, Shah said the company has been able to pass on GST benefits to consumers while sustaining growth in both value and volume, a balance that reflects improving operational efficiency and portfolio resilience.
