Beyond the leader: Dodla Dairy, Heritage Foods, and Hatsun Agro leverage VAP and expansion to capture the organized market surge.
The Indian dairy sector is positioned for massive expansion, fueled by urbanization, shifting dietary habits, and government support, including policies like the National Dairy Development Program and the Rashtriya Gokul Mission. As both the world’s largest milk producer and consumer, contributing approximately 24% to global milk production, India’s organized dairy sector is forecast to grow at a Compound Annual Growth Rate of 6.9%, reaching a colossal $41.8 billion by 2030 (Source: Dodla Dairy’s annual report). Three key players—Dodla Dairy, Heritage Foods, and Hatsun Agro—are actively drawing investor attention by strategically positioning themselves to capture this growth wave through expanded capacity and a focus on high-margin products.
Dodla Dairy is aggressively pursuing growth through an integrated model that now spans 13 Indian states and has expanded internationally to Kenya, Uganda, and Singapore. In Q1F26, the company posted its highest quarterly revenue of ₹10 billion (up 10.5% YoY), driven by a 12% increase in Value-Added Products (VAP) sales, which now account for 36.2% of total sales. Despite revenue growth, margins fell due to unseasonal rains and higher procurement prices (up 9.5%), resulting in a 320 basis points drop in EBITDA margin to 8.2%. However, the company is mitigating risks by investing ₹2.8 billion in a new greenfield facility in Maharashtra and acquired HR Food Processing for ₹2.7 billion to diversify geographically.
Heritage Foods is also executing its “Vision 2030” to become India’s most admired dairy nutrition company, serving over 10 million consumers daily across 17 states. The company recorded its third consecutive quarter of double-digit growth with Q1F26 revenue rising 10% YoY to ₹11.3 billion, propelled by strong milk sales and pricing power. Despite this, unseasonal rains and operational pressures led to margins falling to 6.5%. Heritage is heavily focused on VAP, which contributed 36.1% to total revenue, with curd being the largest VAP category (70% of VAP revenue). The company is investing in a greenfield ice cream project at Shamirpet, anticipating explosive growth in the ice cream sector.
Hatsun Agro, India’s largest publicly listed dairy company, continues to be a market leader emphasizing vertical integration from cattle care to distribution. The company is actively diversifying its geographical revenue, with the share from Tamil Nadu dropping from 67% five years ago to 55% in FY25. Hatsun’s Q1F26 revenue increased by 6.7% to ₹25.3 billion, with margins seeing a significant 100 bps rise to 15%, and PAT increasing by 13% to about ₹1.5 billion. To strengthen its Eastern India presence and VAP portfolio, Hatsun acquired Milk Mantra Dairy for ₹2.3 billion, which is expected to boost FY26 revenues.
In terms of valuation, market leader Hatsun Agro trades at a premium P/E multiple of 66.6x, lower than its 10-year median but significantly higher than the industry average of 28.9x. In contrast, Dodla Dairy (31.1x) and Heritage Foods (25.9x) are trading closer to their median and industry multiples, suggesting a more balanced valuation. While all three are well-positioned for growth, the near-term focus for investors and analysts in the dairy economics space will be on execution, strategic VAP expansion, and margin recovery from recent commodity and weather-related pressures.
Source: Analyze the full stock insights and growth strategies of major Indian dairy players at The Financial Express.
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