In light of Kwality's woes, how did Indian dairy majors fare in the past 5 years?

Amul satellite dairy in Khatraj village, Gujarat. Representative Image (REUTERS/Amit Dave)

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26 Aug, 2025 12:21

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Kwality, one of India’s most well-known dairy companies, hit the lower circuit on two consecutive trading days earlier this week, thus triggering pandemonium amongst its investors. On the back of subsequent clarifications issued by the company’s management in this regard, wherein no facts/events were attributed to such a drastic downfall, the stock not only recovered from yesterday’s unexpected intra-day 20 percent correction, but also gained 6 percent by end of the session, and seems to be doing well.

In the wake of this hullabaloo, we analyzed the fundamental parameters of India’s dairy majors over a five-year period to determine the best performers across a series of financial variables.

Here’s what our study suggests:-

Sales slowdown pan-industryAs seen in the exhibit below, almost all players witnessed a decline in the rate of top-line growth from a year on year perspective. Hatsun Agro, however, managed to swim against the wave by posting a robust set of revenues every year.

Best Operating Margins
Kwality's and Hatsun Agro's margins recorded an uptick over the years, barring a minor blip in FY15 in case of the latter. EBITDA margins of other companies were subject to erratic fluctuations when looked at from an overall standpoint.

The most consistent bottom-line performer
Kwality’s profits, unlike others, grew steadily every year. Additionally, the degree of volatility in its profit after tax (PAT) margins was also the least.

Debt-equity synopsis
Though all companies in the dairy space have been gradually decreasing their dependence on borrowed funds for operations, the likes of Hatson Agro and Kwality need significant and noticeable improvement on this front in comparison to their peers.

With GST now underway, unorganised entities, which comprise a significant chunk of India's dairy industry, are likely to lose out on their pricing advantage to organised counterparts over a period of time. Given the inelastic demand for dairy products across the breadth and depth of the country, the sector as a whole is poised to grow well going forward. Nonetheless, how things pan out for each of the above companies in due course remains to be seen.

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