Parag Milk Foods Limited (PMFL), a leading dairy-FMCG company in India, has announced its financial results for the first quarter, showcasing robust growth and operational performance.

Revenue Growth and Volume Expansion

The company reported its highest-ever first-quarter revenue of ₹852.00 crore, marking a significant 12% year-on-year growth. This impressive performance was underpinned by a solid 5% increase in overall volume, with core categories such as ghee, cheese, and paneer witnessing an even stronger 9% volume growth.

Financial Highlights

• EBITDA: Increased by 6% year-on-year to ₹66.00 crore
• Profit Before Tax (PBT): Rose by 9% to ₹29.00 crore
• Profit After Tax (PAT): Grew by 1% to ₹28.00 crore

Despite the growth in absolute terms, the EBITDA margin saw a slight contraction to 7.7% compared to 8.1% in the same quarter last year.

Core Categories and Market Position

Parag Milk Foods' core categories, primarily consisting of ghee, cheese, and paneer, contributed 57% to the total revenue. The company maintains a strong market position with:

• 22% market share in the branded cow ghee segment
• 35% market share in the cheese category

New Age Business Performance

The company's new age business, comprising Pride of Cows and Avvatar brands, showed exceptional growth:

• 57% year-on-year value growth
• Now constitutes 9% of overall business, up from 6% in the previous year
• Avvatar brand grew 8x over the past three Q1s

Operational Insights

• Average milk procurement: 16.5 lakh liters per day, up 10% quarter-on-quarter
• Average milk prices: ₹37.00/liter, an 18% year-on-year increase

Strategic Initiatives

Parag Milk Foods has been focusing on brand building and market expansion:

1. Engaged in regional marketing through popular TV shows
2. Launched the "What's the Source?" campaign for Pride of Cows
3. Expanded reach through quick commerce platforms
4. Implemented a 360-degree marketing strategy combining traditional and digital platforms

Management Commentary

Mr. Devendra Shah, Chairman of PMFL, commented on the results: "Q1 has set a promising tone for PMFL as we begin the new financial year. Delivering our highest-ever first-quarter revenue reflects our strategic focus and disciplined execution. Our value-added product portfolio and purpose-led marketing are deepening consumer trust and supporting long-term value creation."

He further added, "As the festive season approaches, we are energized by the growing momentum. Our growing portfolio of value-added products, including traditional sweets, ghee, and cheese, is well-positioned to meet the festive demand, powered by consumer trust and brand love."

Looking Ahead

With its strong performance in Q1, Parag Milk Foods appears well-positioned to capitalize on the upcoming festive season and continue its growth trajectory. The company's focus on value-added products, brand building, and expansion of its new age business segments are likely to be key drivers for future growth.

Investors and market observers will be watching closely to see if Parag Milk Foods can maintain this momentum in the coming quarters, especially in light of the evolving dairy market dynamics and consumer preferences in India.

Recent developments in the Indian taxation landscape suggest potential changes that could affect companies in the food industry, including Parag Milk Foods Ltd . Reports indicate that discussions may soon begin regarding the lowering of Goods and Services Tax (GST) rates for various food products.

Possible GST Rate Reduction

The Indian government is reportedly considering a reduction in GST rates for certain food items. This move, if implemented, could have significant implications for companies operating in the food sector, including major players like Parag Milk Foods.

Potential Impact on Parag Milk Foods

As a leading manufacturer of dairy products, Parag Milk Foods could be directly affected by any changes in the GST structure for food items. The company's product portfolio, which includes milk, cheese, ghee, and other dairy products, may see altered pricing structures depending on the specifics of the potential GST rate reduction.

Industry-Wide Implications

The potential lowering of GST rates on food products could have far-reaching effects across the food industry:

• Consumer Benefit: Lower tax rates might translate to reduced prices for end consumers, potentially stimulating demand for food products.
• Operational Adjustments: Food companies may need to recalibrate their pricing strategies and financial projections in response to the tax changes.
• Market Competitiveness: Altered tax rates could influence the competitive landscape within the food industry, potentially affecting market shares and profitability.

Looking Ahead

While these discussions are still in the preliminary stages, food industry stakeholders, including Parag Milk Foods, will likely be monitoring the situation closely. Any concrete decisions on GST rate reductions for food products could have a notable impact on the company's operations, pricing strategies, and overall market position.

Investors and industry observers are advised to stay tuned for further developments on this matter, as it could significantly influence the financial outlook of companies in the food sector, including Parag Milk Foods Ltd.