""Our focus on enhancing product lines under the Gowardhan and Go brands remains key to our revenue growth. The demand for both traditional and innovative dairy products is on the rise across urban and rural markets."" - Management
In Q2 2024, Parag Milk Foods Limited reported robust revenue growth of approximately 14.96% QoQ, reaching INR 8.71 billion, driven by increased demand for their dairy products. Notably, the company has enhanced its gross profit margins to 23.02%, reflecting a 9.36% growth YoY. However, operating income saw a significant decrease of 70.11% QoQ due to higher operating expenses, resulting in an operating income of INR 510.8 million. Management remains optimistic regarding future performance despite the operational challenges faced this quarter, attributing ongoing growth to strategic marketing initiatives and product diversification efforts.The net income for the quarter stood at INR 292.1 million, marking a 7.00% increase compared to the previous quarter, highlighting improved overall profitability amidst challenging market conditions.
Key Performance Indicators
Revenue
8.71B
QoQ: 14.96% | YoY:9.17%
Gross Profit
2.01B
23.02% margin
QoQ: 29.23% | YoY:9.36%
Operating Income
510.80M
QoQ: -70.11% | YoY:19.06%
Net Income
292.10M
QoQ: 7.00% | YoY:15.97%
EPS
2.45
QoQ: 6.99% | YoY:13.95%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** INR 8,713.1 million (YoY: +9.17%, QoQ: +14.96%)
**Gross Profit:** INR 2,006.0 million (YoY: +9.36%, QoQ: +29.23%)
**Operating Income:** INR 510.8 million (YoY: +19.06%, QoQ: -70.11%)
**Net Income:** INR 292.1 million (YoY: +15.97%, QoQ: +7.00%)
These metrics indicate a healthy revenue stream, although the drop in operational efficiency reflects the need for strategic cost management to maintain profitability.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
8.71B
9.17%
14.96%
Gross Profit
2.01B
9.36%
29.23%
Operating Income
510.80M
19.06%
-70.11%
Net Income
292.10M
15.97%
7.00%
EPS
2.45
13.95%
6.99%
Key Financial Ratios
currentRatio
1.86
grossProfitMargin
23%
operatingProfitMargin
5.86%
netProfitMargin
3.35%
returnOnAssets
1.49%
returnOnEquity
3.04%
debtEquityRatio
0.67
dividendPayoutRatio
20.4%
priceToBookRatio
2.38
priceEarningsRatio
19.64
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Commentary Highlights:
- Market Strategy: Management emphasized, "Our focus on enhancing product lines under the Gowardhan and Go brands remains key to driving our revenue growth. The demand for both traditional and innovative dairy products is on the rise across urban and rural markets."
- Future Outlook: Acknowledging recent challenges, the management stated, "Despite increased operating costs, we remain committed to exploring new markets and scaling production efficiencies to improve our margin profiles moving forward."
"Our focus on enhancing product lines under the Gowardhan and Go brands remains key to our revenue growth. The demand for both traditional and innovative dairy products is on the rise across urban and rural markets."
â Management
"Despite increased operating costs, we remain committed to exploring new markets and scaling production efficiencies to improve our margin profiles moving forward."
â Management
Forward Guidance
Looking ahead, management has set ambitious targets for revenue growth of 15-20% for the upcoming quarters, driven by the introduction of new product variants and strategic marketing alliances. They highlighted the significance of increasing export activities to tap into emerging markets. Investors should monitor cost containment initiatives and market penetration strategies as essential factors determining future profitability.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PARAGMILK.NS Focus
23.02%
5.86%
3.04%
19.64%
HERITGFOOD.NS
15.40%
6.46%
5.45%
30.12%
HATSUN.NS
22.00%
6.06%
3.94%
102.89%
SHK.NS
43.90%
10.50%
3.42%
26.02%
TIMETECHNO.NS
28.20%
11.30%
3.67%
22.59%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Parag Milk Foods Limited presents a mixed but overall positive investment outlook following strong revenue growth and improved net income, despite operational challenges. The company's established position in the Indian dairy market, coupled with their strategic focus on innovation and expansion, underlines its potential for sustainable long-term growth. However, investors should keep an eye on the management's ability to control costs and navigate market volatility efficiently.
Key Investment Factors
Growth Potential
Parag Milk Foods has significant growth potential fueled by rising dairy consumption in India and the expansion of their product portfolio. The company aims to leverage its established brand presence to capture market share in both domestic and export markets.
Profitability Risk
Primary risks include volatile raw material prices, competition from other established dairy brands, and the impact of regulatory changes on dairy production standards.
Financial Position
The company maintains a solid financial position with a current ratio of 1.86, indicating good short-term liquidity, although its interest coverage ratio at 2.26 highlights concerns over operational efficiency relative to debt obligations.
SWOT Analysis
Strengths
Strong brand recognition with established market presence under multiple product lines
Diverse product portfolio catering to various consumer needs
Solid growth in revenues and net income YoY
Weaknesses
Declining operating income indicates potential inefficiencies in cost management
Heavy reliance on the Indian market for revenues with limited international presence
High operating expenses affecting profitability
Opportunities
Expanding product offerings and entering unexplored markets
Growth in the health-conscious consumer segment affecting demand for dairy alternatives
Increase in export activities targeting emerging markets
Threats
Intense competition from both domestic and global dairy brands
Volatility in raw material costs impacting profit margins
Changing consumer preferences amid health trends moving towards plant-based options