Dodla Dairy Reports 44% Drop in Q2 Net Profit Amid Rising Procurement and Input Costs

Integrated dairy company Dodla Dairy Ltd has reported a consolidated net profit of ₹36.59 crore for the second quarter ended September 30, 2026. This represents a decline of 44.3 per cent compared to the ₹65.67 crore recorded in the same quarter of the previous financial year.

During the board meeting held to approve the financial results, the company also cleared a proposal to establish a joint venture in India with Meadow India Holdings Ltd (MIHL). The proposed entity will focus on marketing and selling dairy ingredients to businesses. Under the terms, Dodla will hold a 40 per cent stake, while MIHL will own the remaining 60 per cent, subject to a formal joint venture agreement and necessary regulatory approvals.

Revenue from operations for the quarter rose 17.4 per cent to ₹1,196.02 crore, up from ₹1,018.82 crore in the corresponding period last year. However, the company noted that these consolidated results are not directly comparable due to its acquisition of HR Food Processing Private Ltd, which became effective on August 1, 2025.

The financial dip was primarily driven by rising input costs. According to the company's investor release, milk procurement prices increased by 15.7 per cent year-on-year to ₹43.2 per litre. In contrast, the realisation price grew by only 8 per cent to ₹61.9 per litre. Additionally, packing material costs surged by 41.6 per cent, while overhead expenses per litre rose due to inflation, the implementation of the new labour code, and geopolitical challenges.

To mitigate these pressures, Dodla Dairy increased milk prices by ₹2.5 per litre during the quarter. Dodla Sunil Reddy, Managing Director, noted that because the price revision came into effect during the second half of the quarter, its full financial benefit was only partially reflected in the Q2 FY27 results. The company also pointed out that festive demand shifted from the second quarter last year to the third quarter this year.

On the operational front, milk procurement increased by 9.3 per cent to 21.3 lakh litres per day, while milk sales grew by 8.4 per cent to 14.2 lakh litres a day. Sales of value-added products reached ₹327 crore, compared to ₹292.8 crore previously, with curd sales volume registering a 23 per cent growth to 444.7 tonnes a day. Furthermore, the company's business operations in Africa, spanning Kenya and Uganda, recorded a strong revenue growth of 55.9 per cent.

Following the earnings announcement, Dodla Dairy's scrip traded down by 1.11 per cent on the BSE, standing at ₹983.40 during the first hour of trading.

"Dodla Dairy's Q2 results highlight a common margin squeeze faced by traditional manufacturing and FMCG businesses when input costs outpace pricing power. Even with strong volume growth and a 17.4 per cent increase in revenue, a 15.7 per cent jump in procurement prices severely impacted the bottom line. For established enterprises, managing supply chain inflation while timing consumer price revisions is critical. The proposed joint venture with Meadow India Holdings also indicates a strategic move to diversify revenue streams into business-to-business dairy ingredients." — Dr. Shishir Gupta, Founder & CEO, StartupLanes