Milky Mist gets SEBI nod for Rs 2,000-crore IPO; to use proceeds for debt repayment, expansion

Who’s selling shares in the IPO?

As Moneycontrol had first reported, the OFS of up to 1.5 crore equity shares will see the company’s promoters—founder Sathishkumar T and Anitha S—partially offload their holdings. Sathishkumar, who started Milky Mist in the 1990s as a small dairy operation in Erode, continues to lead the business and will retain a significant stake post-listing.

The limited OFS indicates a partial promoter exit, with most of the proceeds from the IPO expected to go into the company rather than shareholders.

How will Milky Mist use the IPO proceeds?

Milky Mist plans to use the fresh issue proceeds primarily to repay or prepay borrowings, strengthen its balance sheet, and fund expansion initiatives. Of the total, Rs 750 crore has been earmarked specifically for debt reduction, while the remainder will be deployed for general corporate purposes, capital expenditure, and working capital needs.

As of May 31, 2025, the company’s total consolidated borrowings stood at Rs 1,463.59 crore, including both secured and unsecured debt. Reducing leverage is a key focus area as the company prepares for its next phase of growth and capacity expansion.

What are the company’s key risks?

Milky Mist’s IPO filings highlight several operational and structural challenges.

First, the company is heavily reliant on a single manufacturing facility. Any disruption due to natural disaster, technical failure, or labour unrest could severely affect operations, as there is no backup production unit in place.

Second, its distribution network depends on a small group of super stockists and distributors, exposing it to concentration risks. Despite a growing national footprint, 71 percent of its revenue still comes from southern states such as Tamil Nadu and Karnataka, leaving it geographically skewed.

Third, raw milk price volatility remains a major input risk. Milk is the company’s largest raw material, and price fluctuations can squeeze margins—especially in price-sensitive categories like curd and paneer, where passing on higher costs to consumers is difficult.

Lastly, the competitive landscape is intense, with Milky Mist competing against FMCG majors such as Nestlé India and Britannia, and dairy-focused players like Amul, Hatsun Agro, Dodla Dairy, and Parag Milk Foods—all of whom enjoy greater financial muscle and wider brand recall.

That said, Milky Mist’s leadership team, including CEO K. Rathnam, a dairy veteran who spent over a decade at Amul, brings strong sectoral experience that could help the company navigate its next growth phase.

What’s next for Milky Mist?

Milky Mist’s Sebi approval marks a major step for one of India’s few large, homegrown dairy companies built without institutional or private equity backing. The company has carved a niche in the value-added dairy segment, with a focus on premium quality, product innovation, and end-to-end operational control.

The IPO will enable Milky Mist to deleverage its balance sheet, improve liquidity, and fund future capacity expansion, even as it faces input cost pressures and stiff competition.

With Sebi’s nod now in place, Milky Mist joins a growing pipeline of consumer and food brands—including Curefoods—preparing to test investor appetite in the public markets.

Whether its growth story continues to stay creamy will depend on how effectively it expands beyond its southern base and maintains profitability in a market where margins can turn sour fast.