According to Systematix, demand continues to sustain at healthy levels for the dairy products manufacturer and the industry; in addition, for Dodla Dairy there are multiple growth levers working to drive medium-term capacity expansion in Maharashtra, Uganda; building out Osam in the eastern region.
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Systematix Report
Systematix has maintained its Buy rating on Dodla Dairy Ltd., valuing it at P/E of 24 times, broadly in-line with its current one-year forward multiple, June-2028E earnings per share to arrive at an unchanged target price of Rs 1,295, implying a potential upside of 23% from the reports current market price of Rs 1,048.
The brokerage keeps its FY27E-FY29E estimates unchanged, building FY26-FY29E revenue/ profit aftet tax compound annual growth rate of 13%/ 24%.
According to the brokerage, demand continues to sustain at healthy levels for Dodla and the industry; in addition, for Dodla there are multiple growth levers working to drive medium-term capacity expansion in Maharashtra, Uganda; building out Osam in the eastern region.
Systematix expect the company to maintain low-mid teens' revenue growth momentum, spearheaded by India VAP and Africa.
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The brokerage expects stable India/ robust Africa growth (FY26-FY29E sales CAGR of c.12%/ 22%), supported by sustained high VAP growth of c.20%, incremental sales from capacity expansions and addition of Osam.
Persistent sharp milk inflation is a concern and has resulted in operating profit margins getting re-set to materially lower levels over the past two quarters; however, the QoQ margin uptick of 1Q27 (+40bps) and the further uptick guided for Q2 FY27 support Systematix' view that OPMs troughed in Q4 FY26, and should pick up gradually over FY27 as price hikes land and mix improves with increasing salience of VAP/ Africa - the brokerage builds a slim OPM decline in FY27E followed by accretion in subsequent periods.
While milk supply could be constrained/ volatile and procurement costs could remain elevated nearterm, Systematix believes Dodla has the requisite playbook of pricing, inventory management, procurement network and supply chain capabilities to play this phase out.
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