Parag Milk Foods is targeting ₹10,000 crore in revenue over the next three to four years, with the dairy company aiming to expand its operating margin into the early teens as it increases capacity across paneer, cheese and whey protein.
Executive Director Akshali Shah said the company is targeting an EBITDA margin of around 13–14% over the period, compared with the company’s recent operating margin levels.
“In the next three to four years we want to become a ₹10,000 crore company and our EBITDA to be somewhere in early teens, somewhere around 13 to 14%,” Shah said.
Paneer Capacity to Rise Fourfold
Parag Milk Foods plans to quadruple its paneer production capacity from 20 metric tonnes per day to 80 metric tonnes per day.
According to Shah, the company’s existing paneer facilities are operating at full utilisation, prompting the planned expansion.
The company sees significant growth potential in the domestic paneer market, which Shah valued at around ₹1 lakh crore and said is growing at approximately 12% annually. Organised players currently account for an estimated 6–7% of the market, according to the company.
“As consumers evolve, we see that there’s going to be a demand for convenient, consistent and high-quality paneer products,” Shah said.
Cheese and Whey Protein Capacity to Double
The company also plans to double its cheese and whey protein production capacity.
Shah said cheese consumption in India remains concentrated among a relatively limited share of consumers but is expanding rapidly, with the company estimating growth of nearly 35%.
The planned capacity additions are intended to capture rising demand for dairy-based protein and value-added products as consumption patterns become more organised.
New-Age Brands Emerging as Growth Driver
Parag Milk Foods’ newer businesses, including Pride of Cows and Avvatar, are becoming an increasingly important part of its growth strategy.
Also Read: Mother Dairy Targets ₹24,000 Crore Revenue as Value-Added Dairy Becomes Growth Driver
The segment grew 91% over the past year, while its contribution to the company’s revenue has increased from around 3% to 13% over the past five years.
The company expects the new-age business to eventually contribute 20–25% of revenue.
Parag is also expanding its portfolio into newer formats, including protein chips and ready-to-drink beverages. According to the management, these categories generate margins that are nearly twice the company average.
Higher Milk Costs Put Pressure on Margins
The expansion comes amid higher input costs. Shah said milk prices are currently around 13% higher than a year earlier.
Parag Milk Foods reported an 11% increase in revenue in the first quarter, while its operating margin stood at around 7.5%. Recent product price increases are expected by the management to support margin improvement.
Marketing expenditure has remained around ₹130–140 crore annually over the past three years. The company expects spending to remain at broadly similar absolute levels, which would reduce marketing costs as a percentage of revenue as turnover grows.
HoReCa Mix Weighs on Overall Margins
Management also pointed to the company’s product and customer mix as one reason for the difference between its margins and those of some competitors.
Around 35% of Parag Milk Foods’ revenue comes from the hotel, restaurant and catering (HoReCa) segment, which generally operates at lower margins than some consumer-facing value-added categories.
The company is therefore seeking to increase the contribution of higher-margin products, particularly in health, nutrition and newer consumer formats.
Working Capital Efficiency Improves
Parag Milk Foods has also reported an improvement in inventory management, with inventory days declining sequentially from 74 days to 68 days.
Shah indicated that inventory levels could remain around 60–70 days as the company expands its cheese and health-and-nutrition portfolio, while inventory is expected to decline as a proportion of overall turnover.
With capacity expansion across core dairy products and rapid growth in its newer businesses, Parag Milk Foods is positioning paneer, cheese, whey protein and health-and-nutrition products as key components of its longer-term growth strategy.
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