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ICICI Securities Report
Dodla Dairy Ltd.'s revenues increased 22.8% YoY compared to Hatsun Agro Products Ltd. (6.9%) and Heritage Food India Ltd. (21.8%) led by strong 11.7% growth in milk procurement and 19.7% higher revenues from value added product. While the company's Ebitda margin was lower by 245 basis points (short term impact), we believe it has gained market shares in its core regions which is discounted cash flow accretive.
We also note Dodla Dairy has taken multiple pricing hikes in H1 FY23. We model the margin to improve in FY24 led by price hikes, cost saving initiatives and operating leverage.
We model Dodla to report profit after tax compound annual growth rate of 17.6% over FY22- 24E with:
high single-digit growth in milk procurement and market share gains and
distribution expansion.
We remain positive on Dodla due to its competitive advantages and strong growth opportunity in South India.
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