Dodla Dairy Ltd has approved a strategic minority investment of 2% in Sids Farm Private Ltd for ₹11.6 crore, marking its entry into the fast-growing premium direct-to-consumer (D2C) dairy segment even as elevated milk procurement costs weighed on its first-quarter earnings.
The investment, made through a primary infusion at a pre-money valuation of ₹500 crore, will give Dodla Dairy exposure to Sids Farm’s premium antibiotic- and hormone-free dairy portfolio and its expanding multi-region D2C and e-commerce business.
The company said the investment aligns with its core dairy business and complements its existing operations by providing an opportunity to support the growth of a differentiated premium dairy brand.
Premium dairy bet
The move comes as consumer demand for premium, traceable and health-focused dairy products continues to grow across urban India. Sids Farm has built its brand around antibiotic- and hormone-free milk and dairy products, catering primarily to premium consumers through direct delivery and online platforms.
For Dodla Dairy, the investment offers an opportunity to participate in a high-growth niche without making a large capital commitment, while strengthening its presence beyond conventional dairy distribution channels.
Revenue hits record despite earnings decline
Dodla Dairy reported its highest-ever quarterly revenue of ₹1,197.9 crore in the first quarter of FY27, up 19% from ₹1,006.9 crore in the corresponding quarter last year.
However, consolidated profit after tax declined 35.4% to ₹40.6 crore from ₹62.9 crore, reflecting continued pressure from elevated milk procurement costs and higher operating expenses.
The company posted its highest-ever milk procurement volume of 21.1 lakh litres per day (LLPD), representing a 13% year-on-year increase.
Value-added products (VAP) also touched a record ₹414.7 crore, contributing 34.6% of total sales, supported by strong summer demand for curd, buttermilk, lassi and ice cream.
Input costs squeeze margins
The dairy major said milk procurement prices continued to rise faster than selling prices during the quarter, resulting in lower gross margins.
While milk availability improved, the company deliberately maintained elevated procurement prices to build inventories for the coming quarters. It expects milk prices to begin normalising from the second quarter.
Profitability was further affected by higher employee costs following revised minimum wage norms for off-roll workers, increased transportation and fuel expenses owing to a greater share of liquid milk and value-added products, and a 48% increase in packaging material costs driven by geopolitical factors and changes in product mix.
Africa business shines
Dodla Dairy’s Africa operations emerged as a bright spot, with revenue rising 45.6% year-on-year, driven by a 52.3% increase in milk sales. The business also recorded its highest-ever quarterly EBITDA of ₹24.2 crore, aided by market share gains in Kenya through strategic pricing.
The company’s OSAM business also reported improved operational efficiency, resulting in better operating margins compared with the full FY26 performance despite continued pressure on milk procurement costs.
Management outlook
Dodla Dairy Managing Director Dodla Sunil Reddy said the company leveraged a strong procurement cycle during the quarter to build inventories while protecting market share despite elevated milk prices.
He said the pricing strategy was in line with broader industry trends and expressed confidence that procurement prices would begin easing from the second quarter.
Reddy added that the company’s value-added products delivered record sales during the extended summer season, while operational improvements were visible across its Africa, OSAM and Orgafeed businesses. However, the standalone business remained under pressure due to higher procurement costs and delayed price pass-through.