PARAGMILKNSEQ4 FY26May 14, 2026

Parag Milk Foods Limited

8,156words
74turns
13analyst exchanges
3executives
Management on call
Akshali Shah
EXECUTIVE DIRECTOR
Rahul Kumar Srivastava
CHIEF OPERATING OFFICER
Ankit Jain
CHIEF STRATEGY OFFICER
Key numbers — 40 extracted
rs,
omes, where the business began to scale with greater clarity and confidence. Over the past few years, we have been consciously reshaping Parag into more focused future- ready dairy and nutrition compan
INR3,800 crore
ction became far more evident, not just in what we delivered, but how we delivered it. We crossed INR3,800 crores in annual revenue, growing in double digits with volume growth of 5%. Overall, the core catego
5%
it. We crossed INR3,800 crores in annual revenue, growing in double digits with volume growth of 5%. Overall, the core categories' volumes grew by 8% and the new age business that is Avvatar and
8%
growing in double digits with volume growth of 5%. Overall, the core categories' volumes grew by 8% and the new age business that is Avvatar and Pride of Cows grew up 91%. More importantly, this gr
91%
categories' volumes grew by 8% and the new age business that is Avvatar and Pride of Cows grew up 91%. More importantly, this growth was accompanied by stronger profitability, improved margins and a
28%
spite elevated milk prices and inflationary pressure, we were able to expand our gross margins to 28% in Q4. This was not driven by external factors, but by sharper execution. That is with better pro
INR100 crore
rofitability at every level. Our new age business has emerged as a strong growth engine, crossing INR100 crores in quarterly revenue for the second consecutive quarter, and growing over 100% year-on-year in
100%
crossing INR100 crores in quarterly revenue for the second consecutive quarter, and growing over 100% year-on-year in Q4. Its contribution to our overall business has moved to a meaningful double dig
10%
on-year in Q4. Its contribution to our overall business has moved to a meaningful double digit at 10%. The commodity witnessed inflation of 15% year-on-year and 4% sequentially during Q4 FY26 with
15%
rall business has moved to a meaningful double digit at 10%. The commodity witnessed inflation of 15% year-on-year and 4% sequentially during Q4 FY26 with average milk prices at INR42 per litre. On q
4%
ed to a meaningful double digit at 10%. The commodity witnessed inflation of 15% year-on-year and 4% sequentially during Q4 FY26 with average milk prices at INR42 per litre. On quarter-on-quarter ba
INR42
ssed inflation of 15% year-on-year and 4% sequentially during Q4 FY26 with average milk prices at INR42 per litre. On quarter-on-quarter basis, while the milk prices inched up 4% sequentially, the compa
Guidance — 20 items
Akshali Shah
opening
“If I were to describe FY26 in one line, I would call it a pivotal year where our strategy started to translate into visible and measurable outcomes, where the business began to scale with greater clarity and confidence.”
Akshali Shah
opening
“In FY26, that direction became far more evident, not just in what we delivered, but how we delivered it.”
Akshali Shah
opening
“The commodity witnessed inflation of 15% year-on-year and 4% sequentially during Q4 FY26 with average milk prices at INR42 per litre.”
Akshali Shah
opening
“In an inflationary environment, the percentage of gross margin last year was 26.7%, which is now 28% for Q4 FY26.”
Rehan Saiyyed
qa
“And my second question is around your New Age business contribution has increased from around 4% in FY '23, we have seen to nearly 10% in FY26.”
Akshali Shah
qa
“And of course this will be backed by newer formats that we launch in protein and newer categories in Pride of Cows that we will launch in the next coming couple of years.”
Ankit Jain
qa
“But FY29, saying precise INR1000 crores we are not commenting on that.”
Ankit Jain
qa
“So there will be newer formats of the product which will be added to these categories, which will also improve the overall mix of New Age business.”
Akshali Shah
qa
“It will be very difficult to carve out something particularly and just for the valuation.”
Ankit Jain
qa
“During quarter 4 of FY26, we withdrew certain promotions specifically from Pride of Cows.”
Risks & concerns — 12 flagged
Despite elevated milk prices and inflationary pressure, we were able to expand our gross margins to 28% in Q4.
— Akshali Shah
So we would be very difficult to say overall how much the business is in the market share per se.
— Akshali Shah
It will be very difficult to carve out something particularly and just for the valuation.
— Akshali Shah
See, as you rightly pointed out, there is a volume decline of 5% almost for the quarter 4 as an overall branded business.
— Ankit Jain
In core categories itself, there is a volume decline of 3%.
— Ankit Jain
We have explained in the investor presentation that the decline is mainly due to the institutional and export sales in the base year, specifically in the core categories itself, which has led to basic decline in the overall growth.
— Ankit Jain
I'm not getting into the global economics, but there have been decline in the export sales Y-o-Y for quarter 4.
— Ankit Jain
And hence, we see the decline in the core categories.
— Ankit Jain
So because of the war and all the things, there were inflationary pressure on the polymer prices and plastic raw material.
— Avnish Tiwari
As far as diesel and petrol prices, if the prices are increased, certainly, we will be able to take the price increase because this will create a lot of cost pressure on the supply chain and logistics.
— Avnish Tiwari
Congratulations to the management for the gross margin expansion during a difficult year and also absolutely wonderful growth on our new age business.
— Rahul Jain
It will be very difficult to comment on something as short-term as this year.
— Akshali Shah
Q&A — 13 exchanges
Q
So yes, I want to ask regarding your Avvatar segment. That Avvatar has now became a meaningful growth driver with its strong traction in e-commerce and quick commerce. So can management share the current market share in the sports nutrition category and how the brand is differentiating itself versus international whey protein players entering India?
Akshali Shah
So see, as you see the protein industry overall is going into different, different segments. You have dairy protein, you have the plant protein and we have which is now yeast protein as well. But there is no one such data which actually says that how is the protein category. It's still very unorganized and it's still a very import-driven category. So there is no data. We have not subscribed to a data as such. But overall, when we see the quick com and the marketplace numbers, we are somewhere between 14% to 15% market share in the protein segment. But of course, a large quantum of our sale als
Q
So ma'am, you mentioned that the contribution from the New Age business would be around 25% in the next 3 years, which roughly translates to around INR950 crores of revenue. So is it safe to assume that we can hit the INR1,000 crores mark in the new age business, including Avvatar and Pride of Cows in FY '29?
Ankit Jain
See we are working on our strategy for INR10,000 crores road map. But FY29, saying precise INR1000 crores we are not commenting on that. What we are saying is as the newer formats we add into this basket of new age business, the way we have added, say, Protein Wafer Bar or the way we have added Greek Yogurt in Pride of Cows. So there will be newer formats of the product which will be added to these categories, which will also improve the overall mix of New Age business. Besides the significant growth what we see in the core business itself of, say, a Whey Protein Powder or even a Pride of Cows
Q
My question is that this new age business, we will definitely hit INR1,000 crores. It's a matter of time, whether '28, '29 or '30. My question is, typically, it is like a -- specifically Avvatar it's like a D2C brand and D2C brand has huge multiple in terms of valuation. Is there a thought of actually separating this vertical and get more value created, not from only a valuation perspective, but strategically also the way this brand should run is very different than the traditional brand. Any thoughts on that?
Akshali Shah
So I know how the D2C businesses nowadays are getting valuation. But if you see our long-term objective here, and we created these 4 wonderful brands is to have a sustainable and a profitable business and sustain it and grow the business in a certain way, and to, of course, create value for all the stakeholders. That's the overall objective. But of course, we've never really thought of separating one little piece of it and doing a separate valuation piece, not at all. You also need to see that Parag is a completely integrated business model from the farm that we have with 5,000-plus cows to th
Q
So my first question is, we have been doing very good volume growth till Q3. In Q4 in our core categories, volume growth has come down significantly and sharply. You talked about Q4 of last year having some institutional sales build-up. So going into FY27, how should we look at this core category volume growth? And since you have taken steep price increases, does it having some impact on that? And should we recalibrate the pricing strategy?
Ankit Jain
See, as you rightly pointed out, there is a volume decline of 5% almost for the quarter 4 as an overall branded business. In core categories itself, there is a volume decline of 3%. We have explained in the investor presentation that the decline is mainly due to the institutional and export sales in the base year, specifically in the core categories itself, which has led to basic decline in the overall growth. Having said that, we understand that we have to grow year-on-year. However, the exports have been relatively on a lower side. I'm not getting into the global economics, but there have be
Q
Ankit, you have earlier alluded to about sharing the incentive number for the full year. If you can share about the number and its impact on our overall margins for FY26?
Ankit Jain
I'll give you the number of the incentive because it will be soon out together with the schedule of the revenue from operations. But for the year ended for this year, the incentive number has reduced drastically. So overall incentive number for current year is almost INR46 crores as against INR88 crores last year, mainly on account of 2 reasons. One, last year, I think we have clarified that for last year, we had accounted for almost 2 years of incentive because there was additional scheme under Mega, which we had applied for and we got the sanction. So that's where we had to account for a lar
Q
My first question is on employee expenses. If I look at our sales growth and vis-a-vis our employee expenses have just exploded at north of 20% growth for like a couple of quarters now on a Y-o-Y number, whereas growth has tapered down significantly. So where is this mismatch? Like did we hire too many people assuming a lot of sales, but which did not transpire? Can you talk about this anomaly, please?
Ankit Jain
See, employee cost, I will give you a couple of reasons. Last quarter, we have had 2 impacts in the last sequential quarter for quarter 3. As we mentioned, typically, the appraisal gets subsumed in quarter 3. Even so is all the previous year trend also if you look at, so quarter 3 is typically higher than the first half of the year. So that is one reason on the cycle of appraisal. The second reason is the change in the Directors' remuneration. I think the resolution was approved on 29th September post the AGM, and there was an impact corresponding to the same. The third is with respect to the
Q
Sir, my question is also on core category. We have 22% market share in Ghee. And I'm assuming because you're saying that you are expanding the distribution. So I'm assuming that this market share is coming from presence in mostly North and Western markets. So can we assume that double-digit growth in Ghee should not be a problem and Cheese also mostly is in Western North? So can you explain what are the drivers of the growth? Is it just distribution and not having presence across India or penetration? So how should we think about long-term core category growth? Because I think even though your
Vinod Krishna
Sir, I agree, but there should be somebody already present there, right? So are we not having any challenges? So that was my question, like you go to UP, but there should already be some people already there. So how do you get the market share? Rahul Kumar Srivastava: Yes. No, basically, the main thing which is changing, we all must know is about the change of the consumer preference from unorganized players to organized players. So if you talk about Ghee, then because of a lot of bad publicity of the adulterated Ghee and also a lot of people are changing from unorganized to organized ghee Bra
Q
Given the past cycles you would have seen in terms of the inflation shocks, currently, what we are experiencing in terms of fuel cost increase, which may lead to feedstock price increase and eventually the milk price increase. And then there is some also concerns around El Nino. So if you were to take a scenario, what kind of price increases which we might experience and how you plan to sort of -- I mean how much lag typically you have before you are able to pass on these in your, let's say, liquid milk price? I know in the value-added, you would have more pricing strategy, but just want to un
Avnish Tiwari
Sir, and do you have a perspective how much the milk procurement price today is around INR42. How much or what are the probable scenarios there, which can go up given the farmer feed price go up? Rahul Kumar Srivastava: See, as compared to last year, we have about 15% more prices in milk, which is presently at the rate of INR42 per litre. What I think the prices should be stable for next 2, 3 months until something big happens in energy prices because that has an impact on the logistic and collection of milk and all the things, including cattle feed prices. So if things are stable from the war
Q
My first question is on the inventory levels. At INR730 crores, I just wanted to understand how much is bulk fat versus cheese. Now I do understand that in order to produce whey protein, we produce cheese and paneer as well. But from a strategic perspective, is this a conscious working capital investment considering the higher milk prices or stocking demand? Or is it a sign of channel inventory buildup?
Ankit Jain
See, there is no channel inventory as such. The entire inventory, whether depot stock or the factory stock, even the SFG stock is our inventory. Having said that, if you look at overall variance in inventory, the inventory has increased by almost INR150-odd crores and purely on account of rate variance at the overall level. There will be mix which would have changed. But overall, the quantitative variance at the overall inventory level is almost nil and the entire inventory is because of the inflation. Having said that, the inventory composition has also changed over a period of time consideri
Q
Good set of results considering this hyperinflationary environment and great growth on new age. I have a couple of questions. The first question is, I mean, gross margin improvement is evident. Question is because of institutional sales reducing and export sales reducing, do you think it's a mathematical impact on gross margin improvement? I mean once institutional sales comes back, I'm hoping they come back institutional export sales, do we come back to 26%, 27% gross margin like the last quarter? I mean this is only mathematical, right, because institutional sales at lower margin didn't get
Ankit Jain
See, while you are looking at only the institutional sales, if you look at in quarter 4, actually, we have increased prices across the board. We have increased prices in Ghee. We have increased prices in liquid milk. We have increased prices in Pride of Cows from INR120 per litre to INR135 a litre. Similarly, in Avvatar also, there are pricing changes. And plus there is a pricing promotion mix, which we keep on tweaking for our overall operating effectiveness. Having said that, so of course, it has, of course, brought in a good amount of margin change from where we were in Q3 because Q3 was mo
Q
Congratulations to the management for the gross margin expansion during a difficult year and also absolutely wonderful growth on our new age business. So a couple of questions straight away. On the new age business, Akshali, if you could share your thoughts from growing from this base of roughly about INR360 crores, can we look for further 50%, 60% growth going ahead in the current year? And the second question, Ankit, you mentioned about one-off in the employee expenses to one of the previous participants with regards to ESOP and director remuneration. If you could just give out that number,
Ankit Jain
Yes. So before I request Akshali to answer you on the question number one, let me answer you on the employee cost front. So one, you would have seen the shareholders' approval on September 29. So overall, the change in the remuneration for executive directors is roughly around INR9-odd crores. That is for the full year from a base year of INR6 crores to almost a INR15 crores number. That is one. Secondly, the overall impact on account of ESOP is almost around INR5 crores. Both of this has been subsumed during quarter 3 and quarter 4 and largely in quarter 4. These are the numbers. Now coming o
Q
There was a slight degrowth in your new age business around close to 2% and this was due to as you increased your whey price around 3x in last 1 year. And in Jan to clear your inventory, you decreased the price by 10% to clear the inventory. Otherwise, your whey segment would have degrown. So can you please throw some light on that?
Ankit Jain
See new age business, as I think I explained in the previous answer that there are a couple of changes in new age business. One, in Q4, we have tweaked down the pricing promotion strategy for Pride of Cows. We have, of course, increased the prices, reduced promotional mix because we have had 1 year of being present in quick com. So we have reduced certain promotion items for improving and sustaining the profitability that is one item. Secondly, we, of course, increased certain prices and of course, change the distribution channel for Avvatar. But having said that, these are all normal transiti
Q
So just one question. In terms of the distribution network, I see that it remains the same for many quarters now. Is that a strategic decision for us to focus on growth through the e-commerce or quick commerce channel? Because in Avvatar, around 65% of the business comes for e- commerce. And we know that they take a lot of margin for putting products on their portals. So just wanted to understand your strategy on this, please. Rahul Kumar Srivastava: Se we are improving our distribution in all the channels, whether it's D2C or modern trade or e- commerce or GT or quick commerce. So let me tell
Akshali Shah
Also on the categories that we are in is growing very, very rapidly on quick com and e-com. And hence, we are growing with the category on these platforms really well. Of course, in GT, we make sure that we're doing increasing our outlet reach and increasing our debt. So if you've been selling x number of lines, how do we reach 2x. So that's the work that we are doing, increasing our depth in the existing and growing our network, especially categories like Paneer and Cheese, protein do really well on quick com and e-com, especially high protein categories, they work really well on these platfo
Speaking time
Ankit Jain
20
Moderator
16
Akshali Shah
9
Rehan Saiyyed
4
Viraj Mehta
4
Parikshit Gupta
4
Vinod Krishna
3
Harshit Khadka
2
Debashish Neogi
2
Ankit Gupta
2
Opening remarks
Akshali Shah
Good evening, everyone, and thank you for joining us. I hope you and your families are doing well, and we truly appreciate your continued interest in Parag Milk Foods. If I were to describe FY26 in one line, I would call it a pivotal year where our strategy started to translate into visible and measurable outcomes, where the business began to scale with greater clarity and confidence. Over the past few years, we have been consciously reshaping Parag into more focused future- ready dairy and nutrition company. In FY26, that direction became far more evident, not just in what we delivered, but how we delivered it. We crossed INR3,800 crores in annual revenue, growing in double digits with volume growth of 5%. Overall, the core categories' volumes grew by 8% and the new age business that is Avvatar and Pride of Cows grew up 91%. More importantly, this growth was accompanied by stronger profitability, improved margins and a healthier balance sheet, which tells us that business is becoming
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