Milky Mist Food Ltd. has received a 'buy' call from DAM Capital upon coverage initiation ahead of its market debut on Tuesday. The brokerage has begun its coverage on a bullish note with a price target of Rs 175, implying a 25% upside.
DAM Capital places a creamy bet on Milky Mist's 100% value added dairy portfolio (VADP), with almost everything but liquid Milk. The portfolio has over 20 categories of dairy products including paneer, cheese, curd, yogurt, butter, ghee and ice cream.
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The brokerage regards the company as the only pure play value added dairy company of scale. It has the largest private packaged paneer brand with a 19% organised share and the largest private packaged cheese brand in South India with a 12%. Milky Mist is also among the top two private packaged yogurt brands nationally with a 13% organised share.
"India's Rs 12 trillion dairy market growing through increasing share towards VADP, (whose share rises from ~51% to ~56%) by FY31, with the organised VADP pool growing at 14.2%," DAM Capital highlighted in its research note.
Milky Mist's milk realisation of Rs 77.8 per litre in FY26 was highest among listed peers and with no liquid milk drag, higher realisation due to valued added portfolio contributes directly to the margins, the brokerage explained.
Out of all its catergories, Paneer's contribution to revenue is the highest (29%), making it the flagship category for Milky Mist; followed by Cheese, which is expected to grow at a 34% CAGR over FY26 to FY29E on newly commissioned capacity.
"We expect revenue to grow at a 23.1% compound annual growth rate over FY26 to FY29E, mainly led by cheese and newer segments," DAM Capital noted.
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Milky Mist Fundamentals & Financials
The franchise is built on a farm to shelf value chain spanning 74,654 farmers, 3,907 automated milk collection units, an in-house cold chain fleet and more than 3,75,000 retail touchpoints, the brokerage said.
Milky Mist's Revenue grew at 31.3% CAGR over FY24 to FY26 to Rs 31.4 billion, the fastest among listed peers, and gross margin of 33% in the previous fiscal was entirely driven by the value added portfolio.
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