Dodla Dairy (DODLA) – Multiple Near-Term Triggers Position It for Re-Rating

Dodla Dairy Ltd, one of India’s leading integrated dairy companies, is on a strong growth trajectory with 3-year revenue CAGR of 18.4% during 2022-2025. Further, the increasing mix of value-added product (VAP) is leading to improving profitability, and robust free cash flow generation. We believe that Dodla’s wide distribution network, direct procurement model and expanding international presence (Uganda & Kenya) positions it to sustain earnings momentum. We note that early onset of monsoons in southern states is likely to lead to an increase in milk production, which is expected to ease procurement prices and support margins. The valuation, at 23.3x FY27 EPS is reasonable in our view with potential upside for re-rating if the management continues to execute on its growth strategy.