Parag Milk Foods targets ₹10,000 crore revenue in three to four years, says executive director Akshali Shah

Pune-based dairy, Parag Milk Foods aims to reach ₹10,000 crore in revenue over the next three to four years with operating margins expanding into the early teens, as per its Executive Director Akshali Shah.

“We have given our guidance saying that in the next three to four years we want to become a ₹10,000 crore company and our EBITDA to be somewhere in early teens somewhere around 13 to 14%," Shah said.

The dairy major plans to quadruple its paneer capacity and double its cheese and whey protein output to capture a shift toward organised consumption.

The stock was trading at ₹272.95 at 12:45 pm on the NSE and has gained more than 3% over the past year.

Parag Milk Foods' existing paneer facilities are operating at full utilisation, prompting an expansion from 20 metric tonne to 80 metric tonne. The domestic paneer market is currently valued at ₹1 lakh crore and is growing at 12% annually, with organised players holding just a 6% to 7% share.

"As the consumers evolve, we see that there's going to be a demand for convenient, consistent and high quality paneer products," Shah noted.

Cheese consumption, currently limited to 30% of India, is expanding at nearly 35%, driving the decision to double both cheese and whey protein capacities.

On the financial front, despite milk prices running 13% higher than last year, recent product price hikes are expected to improve margins beyond the 7.5% reported in the first quarter, which saw 11% revenue growth.

Marketing spends, which hovered around ₹130 crore to ₹140 crore over the last three years, will remain at similar absolute levels, decreasing as a percentage of overall revenue.

A significant growth driver is the new age business, comprising the Pride of Cows and Avvatar brands, which expanded by 91% over the past year. This segment's revenue contribution has risen from 3% to 13% over the last five years and is projected to reach 20% to 25%.

These products yield margins nearly double the company average as the firm extracts maximum value from its milk supply by entering newer formats such as protein chips and ready-to-drink beverages.

Addressing margin differentials with competitors, the management explained that 35% of Parag's revenue stems from the lower-margin hotel, restaurant, and canteen (HoReCa) segment, while high-margin products still form a smaller portion of the portfolio.

Working capital efficiency is also improving, with inventory days falling sequentially from 74 to 68 days. "Going forward when we get into health and nutrition in a much bigger portfolio... the inventory of cheese will be on similar around 60 to 70 odd days," she added, projecting inventory to decline as a percentage of total turnover.

Parag Milk Foods' current market capitalisation is ₹3,424.74 crore.

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