Despite achieving its highest-ever first-quarter revenue, reaching an impressive Rs 852 crore, Parag Milk Foods saw its Profit After Tax (PAT) increase by a mere 1% to Rs 28 crore for the June quarter. This stark contrast between robust revenue growth (12% year-on-year value growth) and minimal profit expansion highlights key challenges in the company’s dairy economics. For agribusiness analysts, this suggests that while sales volumes are strong, underlying profitability is under pressure.

Further dampening investor sentiment, the company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by only 6% year-on-year, reaching Rs 66 crore. More critically, the EBITDA margin experienced a slight dip, moving from 8.1% in the same quarter last year to 7.7% in the current reporting period. This margin contraction is a significant concern for the market, as it indicates reduced operational efficiency or increased input costs for the dairy manufacturer.

The downturn in Parag Milk Foods shares positioned the scrip 7.5% off its 52-week high of Rs 258, reflecting a cautious stance from investors. The company itself acknowledged that margin pressures likely played a substantial role in weighing down investor sentiment. This scenario, where strong revenue generation doesn’t translate into proportional profit growth, is a common challenge for companies in the fast-moving consumer goods (FMCG) and dairy sectors facing rising costs.