Dodla Dairy Q1 Review - Strong Margin Expansion Continues; VAP Sales Scale To Record High: ICICI Securities

ICICI Securities Report

Dodla Dairy Ltd. reported revenue/Ebitda/profit after tax growth of 10.7%/74.2%/85.9%, YoY, respectively. Gross margin expanded 543 bpsYoY led by-

1. deflationary trend in milk procurement prices and

2. higher revenue share of value-added products.

Ebitda margin expanded 420 bps YoY as higher other expenses partly offset the benefits of lower input prices.

We believe higher ad spends may have led to increase in other expenses (+114 bps YoY). Standalone revenue/profit after tax grew 8.5%/103%, YoY, respectively.

With focus on geographical/ distribution expansion, the company may further strengthen its market share. We see scope for expansion in margin and value added products contribution in next two-three quarters. We raise our FY25/26E earnings by 7.0%/6.4% to factor in strong Q1 result.

Our DCF-based revised target price stands at Rs 1,320 (earlier: Rs 1,070). Maintain Add.

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