Parag Milk Foods: New Age Business Grows 59%

Parag Milk Foods (NSE:PARAGMILK) has evolved from a dairy processor into a health- and nutrition-focused consumer brand. It operates four brands: Gowardhan (ghee and paneer), Go Cheese, Pride of Cows (premium) and Avvatar (sports nutrition). What happened: In Q1FY27, total revenue grew 11% YoY to Rs 945 crore. Combined value-added products reached 73.9% of revenue at Rs 698 crore, up from 60% in Q1FY24. The New Age Business (Pride of Cows and Avvatar) grew 59% YoY to Rs 118 crore, with revenue share rising from under 3-4% in FY23 to 12.5% now. Liquid milk revenue fell by 8%. EBITDA grew 6% to Rs 70 crore at a 7.4% EBITDA margin. Why it matters: Go Cheese holds 35% market share (#2 in India) and Gowardhan Cow Ghee holds 22% market share (#1 in branded cow ghee). Avvatar has also expanded into protein bars, RTD cold coffee and creatine, with 75% of revenue through quick-commerce and e-commerce. The company is doubling cheese processing capacity from 60 to 120 metric tons per day over the next 1.5 years. Because cheese and whey production are integrated, this will also double the raw whey available for Avvatar. What I am watching: Net profit fell 20% YoY to Rs 22 crore despite flat pre-tax profit at Rs 29 crore; higher FY27 taxation explains the gap. Management expects revenue growth to exceed 10% in FY27. The New Age Business carries gross margins roughly double the company average. ROCE is 13.4% and the stock trades at 27.5x earnings, a premium to its 5-year median of 23.9x. My stance: The brand architecture is maturing and Avvatar is a credible high-margin growth driver. Cheese capacity expansion while sustaining blended margins will be the real test. I do not hold a position in Parag Milk Foods at the time of writing. This is not investment advice.