Milky Mist IPO: Issue size, partial promoter exit, creamy profits and sour spots decoded

Churning out the capital plan

Milky Mist plans to use Rs 750 crore from the fresh issue proceeds to repay or prepay borrowings. As of May 31, 2025, the company had total consolidated borrowings of Rs 1,463.59 crore, including both secured and unsecured debt. Reducing this burden is a key priority, especially as the company prepares for its next phase of scale.

Another Rs 414.7 crore will be invested in the expansion and modernisation of its Perundurai manufacturing facility, which currently serves as the company’s sole production base. This includes new capacity for yogurt, whey protein concentrate and cream cheese — all growing categories that align with rising urban demand for premium, health-forward dairy.

An additional Rs 129.4 crore has been earmarked for deploying visi coolers, ice cream freezers and chocolate coolers — infrastructure that’s key to strengthening its cold chain and in-store presence. The remaining proceeds will go toward general corporate purposes.

A modest scoop for the promoters

The IPO also includes a secondary component — an offer-for-sale worth Rs 250 crore by the promoter group. Managing Director Sathishkumar T will sell shares worth Rs 150 crore, while Anitha S will offload Rs 100 crore.

As of the DRHP filing, promoters Sathishkumar T and Anitha S together hold 92.39 percent of the company. Their combined stake will be diluted post-listing, though they are expected to retain majority control.

Profits rise, margins hold firm

Milky Mist reported a 29 percent jump in revenue from operations in FY24, rising to Rs 2,349.5 crore from Rs 1,821.6 crore the previous year. Net profit grew a sharp 137 percent to Rs 46 crore, compared to Rs 19.4 crore in FY23. EBITDA stood at Rs 310.4 crore, translating to a margin of 13.2 percent.

The company’s focus on value-added dairy products (VADPs) — such as paneer, curd, yogurt, cheese, butter, ghee, and ice cream — plays a central role in these margins. Unlike traditional dairy companies, Milky Mist does not sell liquid milk. This allows for better pricing power and stronger gross margins, placing it closer in model to an FMCG company than a dairy cooperative.

In FY24, roughly 75.4 percent of Milky Mist’s revenue came from daily-consumption staples like paneer and curd. New product launches — defined as SKUs introduced within the past 24 months — contributed Rs 511 crore, reflecting the company’s ability to drive revenue through innovation, not just volume growth.

Tighter team, slower turnover

Milky Mist had a total of 1,524 employees — both skilled and unskilled — as of March 31, 2025. That’s down from 1,694 employees the previous year. While overall headcount declined, attrition improved. The company’s overall attrition rate dropped to 34 percent in FY25, from 41 percent in FY24.

But the churn story is mixed: attrition among unskilled workers remained high at 69 percent at the end of FY25, while skilled employee attrition stood much lower at 27 percent. The DRHP attributes this pattern to higher job fluidity among blue-collar staff and industry-wide trends in contract-based roles.

Spoilers in the milk

Despite the sweet numbers, the DRHP flags several potential risks. First, the company is entirely dependent on its Perundurai plant. Any disruption — due to natural disaster, technical failure, or labour unrest — could severely impact operations. There’s no backup manufacturing unit in place.

Second, the company’s distribution network is heavily reliant on a small group of distributors and super stockists. While Milky Mist has a pan-India presence, it remains regionally skewed — 71 percent of its revenue still comes from southern states like Tamil Nadu and Karnataka, making it vulnerable to geographic concentration risk.

Third, input costs remain volatile. Raw milk is the company’s single-largest raw material, and pricing fluctuations can squeeze margins unless carefully managed. Passing on costs to price-sensitive consumers, especially in the curd and paneer segments, may not always be feasible.

Finally, competition is intense. Milky Mist squares off against both national FMCG giants like Nestlé India and Britannia, as well as established dairy specialists like Amul, Hatsun Agro, Dodla Dairy, and Parag Milk Foods. All of them bring deeper pockets, broader brand recall, and national reach.

Notably, Milky Mist CEO K. Rathnam spent over a decade at Amul, India’s largest dairy brand — experience that could serve the company well as it scales.

The takeaway

Milky Mist has carved out a niche for itself in India’s fragmented dairy sector by staying focused on value-added products, premium positioning, and tightly controlled operations. Its IPO marks a bid to scale this model further, reduce debt, and invest in new growth levers. With profits rising, margins stable, and expansion in motion, the fundamentals are promising.

But whether the market rewards it will depend on execution, pricing discipline, and how effectively it moves beyond its southern base — without letting the cream curdle.