- India‘s dairy industry expects 13-14% revenue growth in FY 2024-25.
- Strong consumer demand and improved raw milk supply drive growth.
- Value-added products and HORECA segment sales are key contributors.
India’s dairy industry is poised for significant revenue growth of 13-14% in the fiscal year 2024-25, according to Crisil Ratings. This positive outlook is fueled by strong consumer demand and an improved supply of raw milk, thanks to favorable monsoon conditions.
The value-added products segment, contributing 40% to industry revenues, is expected to be a primary growth driver, supported by rising income levels and consumer preference for branded products.
Strong Demand and Improved Supply to Boost India’s Dairy Industry Growth
The HORECA (hotels, restaurants, and cafes) segment’s increased consumption of liquid milk and value-added products also boosts revenue prospects. Despite the anticipated rise in working capital requirements and continued capital expenditure, organized dairies are expected to maintain stable credit profiles due to their strong balance sheets.
The HORECA segment is also expected to support revenue growth through increased sales of liquid milk and value-added products. Despite higher working capital needs and continued capital expenditure, the industry’s credit profiles are likely to remain stable due to solid balance sheets. Improved cattle fodder availability and normalization of artificial insemination and vaccination processes will support a 5% increase in raw milk supply this fiscal year.
Additionally, organized dairies are expected to see an increase in debt levels, mainly due to higher skimmed milk powder (SMP) inventory during the flush season and the need for new milk procurement, processing capacities, and distribution network expansions. The operating profitability of dairies is projected to improve by 40 basis points to 6% this fiscal year, driven by steady milk procurement prices and enhanced milk supply measures.
Efforts such as genetic improvements in indigenous breeds and higher fertility rates in high-yield breeds will further boost milk supply. The industry’s revenue growth is underpinned by a favorable monsoon outlook, better cattle fodder availability, and a transition towards higher consumption of value-added dairy products, making the sector a promising area for investment.
India’s dairy industry is on a path to notable growth in FY 2024-25, with strong consumer demand and improved raw milk supply as key drivers. The focus on value-added products and expansion in the HORECA segment will further bolster the industry’s revenue and profitability.
“Rising sales of value-added products and liquid milk in the hotels, restaurants and cafes (HORECA) segment will also support the revenue growth.” – Mohit Makhija, Senior Director, CRISIL Ratings
