Dodla Dairy earnings: Pre-COVID price increase, lower procurement cost aided margin, says management

Dodla Dairy is on the radar on the back of their Q4FY21 results. This is their first quarterly result post listing. The company has clocked in good growth, owing to a sharp jump in its gross margin. The company reported a net profit of Rs 9.59 crore for the quarter. Its revenue from operations during Q4FY21 increased marginally to Rs 530.5 crore from Rs 527.45 crore, YoY. At the operating level, EBITDA during Q4FY21 jumped significantly to Rs 36 crore as compared to Rs 14.1 crore, YoY. The company’s stock is already up 45 percent from its issue price, and is currently trading at Rs 612 on the NSE.

Sunil Reddy Dodla, Managing Director of the company, said, “Q1 was little difficult for us in terms of topline being muted but we are happy with our bottomline in terms of the operation. We are not much into ice-cream; our products are more into milk and curd so our bottomline has been healthy.”

“For us, on quarter-to-quarter basis if you look at the fourth quarter, it will always be at the lower end of profitability, but if you look at year-on-year basis we have done substantially well. Our profit has increased by 153 percent as compared to last year vis-a-vis current year’s March numbers. Going forward, when you look at the June quarter, we will maintain a stable set of profit compared to previous year’s June quarter,” he said.

On growth, Dodla said, “Our growth numbers have improved in terms of quantity, the numbers have increased by around 8-10 percent, as volume increase has come in. We also had good amount of value increase so we will be going back hopefully to pre-COVID levels of revenue in the current year.”

On margins, he said, “We basically had a price increase that we had taken just prior to COVID coming into play. The full impact of price increase came in March and after COVID set in, our procurement prices also dropped. So, we have got this significant improvement in margins. Going forward, our procurement prices will go up a little bit but our increased prices will continue to remain same. Therefore, we are hoping that we will maintain these margins of double digit as we go forward.”

On market share, he said, “We operate in five southern states of India and our largest market share comes from Karnataka, where we have a little larger market share of 7-8 percent. Overall, we are at around 5-6 percent.