Dodla Dairy - Cyclical Headwinds Creating Deep Value In A Steady Compounder: Systematix Initiates Coverage

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Range of Dodla Dairy Ltd.'s product. (Source: Company website)

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Systematix Research Report

Dodla Dairy Ltd. is gradually climbing up the prominence ladder in India's Rs 15 trillion dairy industry (as per IMARC) by displaying immaculate consistency and efficient execution.

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With regional focus and a continuous improvement mindset, the company has been able to gradually ramp up its procurement base to become the third-largest private dairy player in India, and has also created well-recognised brands in South India.

Strong farmer relationships and a dedicated on-ground team form a strong back-end to support Dodla's distribution expansion. Unlike peers, the company has been conservative in expanding into multiple value-added products by retaining focus on liquid milk and curd.

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However, it has not shied away from investing in international geographies, where profitability and competitive advantages drive a favorable risk reward.

With a cash-rich balance sheet and strong cash generation, the company is now looking at entering new geographies outside South India, via both organic and inorganic means, while also backward integrating into cattle feed to improve working capital and strengthen farmer relationships.

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