Robust demand to whip up dairy industry revenue 14-16%, says Crisil

livemint.com:

Crisil. Last fiscal, disruptions in raw milk supply had led to multiple hikes in retail milk prices, pushing up the topline 19% but impacting profitability. “The profitability of various dairy processors has been coming down over the last couple of years and this implies dairy processors are not being able to completely pass on the cost increase that they have faced to final retail buyers.

As a result, we have seen a significant hike in milk prices," Crisil director Pushan Sharma told Mint earlier in an interview. Given healthy balance sheets, the credit profiles of organised dairies rated by Crisil Ratings will remain strong. “We believe the strong revenue growth in value-added products seen over the past few years will continue.

This fiscal, the segment should grow 18-20% and consequently, the share of value-added products in overall revenue could rise to 40% from 35% four fiscals back. Given that demand from both, retail and institutional segments, remains strong, the share of VAP will continue to rise. On the other hand, liquid milk revenue will grow 8-10% this fiscal backed by steady demand," said Mohit Makhija, senior director, Crisil Ratings.

Prices of milk have surged nearly 24% in the last three years, including a 10.5% rise in the past one year and 0.3% in the past month. The uptrend has been attributed to artificial insemination of animals getting hit during COVID. This led to lower calf birth and consequently a decline in milk production.