Milky Mist Dairy Food Shares Hit Upper Circuit As Q1 Profit Jumps Nearly 10-Fold

Shares of Milky Mist Dairy Food hit the upper circuit limit in Tuesday's trading session after the recently listed dairy products maker reported a sharp increase in its June-quarter profit, supported by strong revenue growth and wider operating margins.

The stock was trading at Rs 232.03 on the NSE, up 10 percent from its previous close, giving the company a market capitalisation of Rs 17,862.68 crore. It opened at Rs 230.79, up 9.4 percent, and touched an intraday high of Rs 230.79.

The rally followed Milky Mist's first quarterly earnings announcement since its stock-market debut. The company's profit after tax surged nearly tenfold to Rs 64.68 crore in the June quarter, compared with Rs 6.53 crore in the year-ago period.

Revenue from operations rose 43.6 percent year-on-year to Rs 973.45 crore from Rs 678.09 crore.

The strong performance also extended Milky Mist's post-listing gains. The stock was trading about 61 percent above its IPO issue price of Rs 140 and around 37 percent higher than its debut price of Rs 165.

Margins improve

Milky Mist said growth during the quarter was broad-based, with summer-focused categories benefiting from an extended hot season, particularly in South India. Higher volumes, an improved product mix and better pricing ability also supported the performance.

Gross profit increased 56.1 percent year-on-year to Rs 333.02 crore, while gross margin expanded to 34.21 percent from 31.46 percent.

EBITDA rose 74.5 percent to Rs 144.89 crore from Rs 83.02 crore, while the EBITDA margin improved to 14.88 percent from 12.24 percent.

Paneer Remains Key Growth Driver

Paneer remained Milky Mist's largest revenue contributor, with revenue from the category growing 34 percent from a year earlier. Cheese revenue increased 38 percent, while curd grew 27 percent.

Ice-cream sales climbed 60 percent, while yoghurt emerged as the fastest-growing category, registering 153 percent growth.

The company could also benefit from increased scrutiny by food-safety authorities against analogue paneer, which is made using vegetable fats rather than milk fat, potentially accelerating the shift towards branded products.

"Paneer will continue to be the star product for Milky Mist," K Rathnam, CEO of Milky Mist Dairy Food Ltd, said.

Milky Mist has the capacity to produce around 150 tonnes of paneer a day, which it says is the largest such capacity under one roof in India. However, utilisation is currently around 50-60 percent, leaving room for the company to increase production without immediate capacity additions.

The company estimates that 90-94 percent of paneer production remains in the unorganised sector, with organised players accounting for around 6-7 percent. Milky Mist has around 20 percent of the organised market.

IPO and listing

Milky Mist listed on the NSE and BSE on August 18 following its Rs 1,553-crore IPO. The issue comprised a fresh issue of 10.20 crore shares worth Rs 1,428 crore and an offer for sale of 89 lakh shares valued at Rs 125 crore.

The stock debuted at Rs 165, representing a 17.9 percent premium to its issue price of Rs 140.

Tuesday's rally comes as investors assess the company's first earnings report as a listed entity, with strong revenue growth and improved profitability driving the stock higher.