Parag Milk Foods Limited (NSE: PARMILKFOOD) is one of the leading dairy and food products companies in India. Founded in 1992 and headquartered in Manchar, Maharashtra, Parag Milk Foods has a diverse portfolio of dairy-based products including milk, cheese, ghee, whey protein, and more. The company went public in 2016 and its shares are listed on the National Stock Exchange of India.
Table of Contents
This report aims to provide a detailed analysis of Parag Milk Foods’ share price trends, financial performance, market position, growth drivers, and future projections. It offers insights into the company’s historical evolution, financial health, product portfolio, and recent developments. The analysis also evaluates Parag Milk Foods’ role in the dairy sector and influences on its stock performance. Most importantly, the report provides Parag Milk Foods’ potential share price targets for 2025-2030 and assesses associated risks and mitigation strategies.
Importance of Share Price Monitoring
Continuously monitoring Parag Milk Foods’ share price movements and trends is crucial for investors in making informed investment decisions. Share price analysis provides insights into:
- Financial health and stability of the company
- Growth prospects and future projections
- Market sentiment and response to strategic decisions
- Competitive positioning in the dairy industry
- Macroeconomic factors affecting the stock
Parag Milk Foods Company Overview
Historical Evolution
Parag Milk Foods Ltd. (NSE: PARAGMILK, BSE: 539889) is a leading private sector dairy company in India with a diverse portfolio across various categories. Founded in 1992 by Mr. Devendra Shah and his family, the company has undergone significant evolution over the years. Here’s a glimpse into their historical journey:
Early Days (1992-2004):
- Started as a small dairy in Manchar with a 20,000 litre capacity.
- Focused on a niche segment – producing skimmed milk powder.
- Became India’s largest exporter of skimmed milk powder by 2004.
Shifting Gears (2005-2012):
- Faced a challenge due to government export ban on milk powder.
- Diversified into cheese production in 2008, becoming a major player.
- Launched Bhagyalaxmi Dairy Farms in 2005 and Palamaner Plant in 2010.
- Introduced new brands like “Go” in 2009 and “Pride of Cows” in 2011.
Recent Growth (2013-Present):
- Expanded product portfolio with RTD brand “Topp Up” (2013) and whey products (2014).
- Focused on innovation and convenience, offering first-of-its-kind products like packaged shredded cheese and cheese in squeeze tubes.
- Increased focus on farm-to-home milk delivery with Pride of Cows brand.
- Achieved steady financial growth with strong sales and profit margins.
Current Status (as of February 9, 2024):
- Market capitalization: ₹3,071.14 Cr.
- Share price: ₹261.65 (as of February 4, 2024)
- Key brands: Gowardhan, Go, Pride of Cows, Topp Up
- Present in 4 major indices: SMLCAP, BSEFMC, ALLCAP, S&P MIDSMLCAP
In 2013, Parag Milk Foods acquired the popular milk brand Gowardhan from the GD Foods Group. This strategic move expanded the company’s market presence in Western India.
The initial public offering (IPO) in 2016 was a key milestone, with the company raising over ₹750 crores through its IPO on NSE and BSE. In 2018, Parag Milk Foods acquired the prominent cheese brand ‘Pride of Cows’ to widen its cheese portfolio.
Financial Indicators
Strengths:
- High Sales Growth: Revenue growth of 40.86% in the last year indicates strong market expansion.
- Efficient Cash Conversion Cycle: A cycle of 52.03 days suggests efficient management of working capital.
- Healthy Liquidity: Current ratio of 2.04 implies the company has enough assets to cover its short-term liabilities.
Weaknesses:
- Poor Profit Growth: Profit growth of -8.92% over the past 3 years raises concerns about profitability.
- Negative ROE and ROCE: Both ROE of -20.07% and ROCE of -8.06% over the past 3 years indicate negative shareholder returns and inefficient use of assets.
- Negative Cash Flow from Operations: Cash flow of -179.44 in the last year implies the company is not generating enough cash from its core operations.
- Low EBITDA Margin: An EBITDA margin of 1.91% over the past 5 years suggests low profitability compared to the industry.
Other Key Ratios:
- Debt-to-Equity Ratio: 0.65, indicating moderate financial leverage.
- Price to Cash Flow: -17.11, implying the stock may be overvalued based on its cash flow generation.
- Interest Cover Ratio: 2.27, suggesting sufficient capacity to cover interest expenses
Current Share Price: ₹261.65
Key Ratios:
- PE Ratio: 28.85 (High)
- ROE: 10.07% (Low)
- ROA: 4.72% (Bad)
- Debt/Equity Ratio: 0.65 (Low)
- Current Ratio: 2.04 (Good)
Read more – Adani Wilmar share price target
Parag Milk Foods share historical movement
Recent Developments,
- Fundraise: In January 2024, Parag Milk Foods raised Rs 131 crore through preferential allotment of shares.expand_more This will help them meet their expansion plans.
- Performance: The company’s financial performance for the latest quarter is not yet available, but in the previous quarter (Q3 FY24), they reported a 17% increase in revenue and a 23% increase in net profit.exclamation
Product Launches:
- Fat-free milk: In January 2024, Parag launched a fat-free milk variant under their premium brand “Pride of Cows”.expand_more This is a response to the growing demand for healthier dairy products.
- Logo revamp: Earlier in 2023, the company unveiled a new logo, signifying a fresh start and focus on innovation.expand_more
Other News:
- Sustainability: Parag Milk Foods continues to focus on sustainable dairy practices, working with farmers and implementing environmentally friendly measures.expand_more
- Community engagement: The company actively engages with local communities and contributes to their development.
Role in the Dairy Sector
Product Portfolio
Parag Milk Foods has one of the widest dairy product portfolios in India spanning:
- Milk: Full cream, toned, double toned milk sold under brands like Gowardhan, Go and Avvatar.
- Ghee: Pure cow ghee, lite cow ghee, and buffalo ghee marketed under Govardhan, Anando and Milkana brands.
- Cheese: Processed cheese, mozzarella, cheese spreads and slices under the GO Cheese brand. It also offers specialty cheese like smoked cheddar, parmesan, feta etc. under Pride of Cows brand.
- Whey Proteins: Whey protein concentrates and isolates offered under the GO Whey brand.
- Curd, Paneer, Flavored Milk: These products are also part of Parag Milk Foods’ growing product portfolio.
Market Presence
- Parag Milk Foods has a pan-India presence, with a wide distribution network across modern trade, general trade and e-commerce channels.
- It is the largest private dairy company in Maharashtra in terms of milk processing capacity. The company procures milk from over 330,000 farmers.
- The GO Cheese brand is a market leader in processed cheese with ~30% market share in India. Market share for whey protein also stands strong at ~25%.
- For milk and ghee, Parag Milk Foods is focused on Maharashtra and Karnataka where its brands enjoy top regional brand status.
- The company is pursuing a “premiumisation” strategy, targeting high-margin value-added dairy products. Food services and HoReCa are key growth channels.
Parag Milk Foods Share Price Analysis
Current Share Price Dynamics
As of February 9, 2024, Parag Milk Foods’ share price is ₹261.65, which is 3.81% higher than the opening price of ₹256.90.
- Today’s High: ₹269.80
- Today’s Low: ₹255.00
- 52 Week High: ₹263.40
- 52 Week Low: ₹68.05
- Market Cap: ₹3,071.14 Cr
- P/E Ratio: 28.85
- P/B Ratio: 3.42
Technical Analysis
Current Price: ₹260.50 (New 52-week high) Overall Trend: Strong uptrend (+194.52% YTD) Recent Performance: Volatile, reaching a new high today but experiencing pullbacks
Technical Indicators:
- Moving Averages:
- Bullish: Price above all major SMAs (5-day, 10-day, 50-day, 200-day)
- Neutral: 20-day and 30-day SMAs flattening out, indicating potential loss of momentum
- RSI: 70.9 (Overbought) – Suggests potential short-term pullback
- MFI: 87.5 (Strongly Overbought) – Reinforces potential for a correction
- MACD: Above center and signal line (Bullish), but divergence with price action suggests weakening momentum
- Stochastic Oscillator: 81.5 (Overbought) – Similar to RSI, indicating potential weakness
- Pivot Points: Price currently above R1, suggesting further upside potential
Chart Patterns:
- Bullish: Long line uptrend, new 52-week high
- Neutral: No active candlestick patterns
Key Levels:
- Resistance: ₹258.00 (R1), ₹263.95 (R2), ₹273.90 (R3)
- Support: ₹248.05 (Pivot), ₹242.10 (S1), ₹232.15 (S2), ₹226.20 (S3)
Shareholding Structure of Parag Milk Foods
| Shareholder | Percentage (%) |
|---|---|
| Promoters | 41.63 |
| Domestic institutional investors | 8.58 |
| Foreign Institutional Investors | 15.73 |
| Public & Other | 23.94 |
| Corporate Holding | 10.12 |
Annual Results and Financial Performance
In-Depth Analysis of Recent Annual Results
Recent Quarterly Results (December 2023):
- Net Sales: ₹ 788.70 Cr
- Profit After Tax: ₹ 33.40 Cr
- EPS: ₹ 2.85
Key Ratios:
- Sales Growth (YoY): 6.53%
- Profit Growth (YoY): 20.00%
- ROE: 4.22%
- ROCE: 4.10%
Analyst Ratings:
- FinStar: 3 stars (Hold)
- Parag Milk Foods is a leading dairy company in India with a diverse product portfolio including milk, ghee, cheese, and yogurt.
- The company has a market capitalization of ₹3,071.14 Cr and its share price is currently ₹261.65.
- The company has been growing its revenue at a CAGR of 186.9% over the past 5 years.
| PARTICULARS | DEC 2022 | MAR 2023 | JUN 2023 | SEP 2023 | DEC 2023 |
|---|---|---|---|---|---|
| Net Sales | 722.64 | 795.93 | 738.05 | 786.99 | 788.70 |
| Profit After Tax | 13.60 | 27.89 | 18.30 | 26.89 | 33.40 |
| EPS (Rs.) | 1.16 | 2.38 | 1.56 | 2.29 | 2.85 |
- Poor profit growth (-8.92% for the past 3 years)
- Poor revenue growth (6.06% for the past 3 years)
- Poor ROE (-20.07% over the past 3 years)
- Negative cash flow from operations (-179.44 Cr.)
Annual Performance Comparison:
| Metric | 1 Year | 3 Year | 5 Year |
|---|---|---|---|
| Sales Growth | 40.86% | 6.06% | 8.27% |
| Profit Growth | 112.94% | -8.92% | -2.69% |
| EPS | ₹ 2.85 | ₹ 2.71 | ₹ 2.77 |
| Dividend Yield | 0% | 0% | 0% |
Evaluation of Financial Health and Stability
- Healthy Liquidity: Current ratio of 2.04 indicates the company has enough short-term assets to cover its short-term liabilities.
- Low Debt: Debt-to-equity ratio of 0.65 suggests a conservative capital structure with minimal reliance on debt financing.
- Efficient Cash Conversion: Cash conversion cycle of 52.03 days signifies efficient management of working capital.
- Growing Sales: The company has shown a 40.86% increase in sales over the past year, indicating growth potential.
- Poor Profitability: Profit growth of -8.92% and ROE of -20.07% over the past 3 years raise concerns about profitability.
- Negative Cash Flow: The company has negative cash flow from operations of -179.44 Cr., indicating difficulty generating cash internally.
- Low EBITDA Margin: EBITDA margin of 1.91% over the past 5 years suggests weak operational profitability.
- Overvalued: P/E ratio of 28.66 might indicate the stock is currently overvalued compared to its peers
Parag Milk Foods Share Price Targets 2024-2030
| Year | Initial Target | Year-End Target |
|---|---|---|
| 2024 | ₹263.37 | ₹282.21 |
| 2025 | ₹309.35 | ₹334.79 |
| 2026 | ₹357.67 | ₹385.21 |
| 2027 | ₹408.52 | ₹440.16 |
| 2028 | ₹462.24 | ₹497.88 |
| 2029 | ₹518.67 | ₹556.39 |
| 2030 | ₹577.89 | ₹623.73 |
Parag Milk Foods Share Price Targets 2024
2024, we expect Parag Milk Foods’ share price to reach initial and year-end targets of ₹263.37 and ₹282.21 respectively.
The projected growth will be driven by a combination of strong earnings CAGR of 22-25%, expansion in valuation multiples from current levels of around 21x to 23-25x, and positive market sentiment.
Key growth assumptions include 15-18% revenue growth from value added products, 250-300 bps margin improvement, and higher exports. However, these targets would be subject to favorable macro conditions, commodity prices, and execution of growth plans.
Parag Milk Foods Share Price Targets 2025
In 2025, Parag Milk Foods’ share price is estimated to hit initial and year-end targets of ₹309.35 and 334.79 respectively. The company could post 20-22% EPS CAGR during the year, supported by operating leverage benefits. The stock could also witness a re rating to 25-28x P/E on the back of consistent growth delivery. Volume market share gains in Maharashtra and Karnataka along with new product launches would be key growth drivers. Competitive intensity and farm level economics remain monitorable
Parag Milk Foods Share Price Targets 2026
For 2026, we project Parag Milk Foods’ share price to reach ₹357.67 initially and ₹385.21 by year-end. The growth will be driven by revenue and earnings CAGR of 18-20% and 22-25% respectively. Margin expansion from premiumisation efforts, entry into new geographies and tactical pricing actions should augment profitability. However, adverse weather events and milk supply risks could create near-term headwinds.
Parag Milk Foods Share Price Targets 2027
In 2027, Parag Milk Foods share price is likely to hit ₹408.52 initially and reach ₹440.16 by year-end. The company’s efforts to expand distribution reach in Southern and Eastern India would start yielding results, supporting >15% revenue growth. Further, moderation in competitive intensity and input costs should aid margin expansion. However, growth rates could taper down compared to earlier years as scale increases.
Parag Milk Foods Share Price Targets 2028
Parag Milk Foods’ share price is estimated to reach ₹462.24 initially in 2028 and end the year at ₹497.88. Growth is likely to normalize to 12-15% levels. Key challenges would include difficulty in acquiring new consumers in saturated markets and escalation in competitive activity. Deterioration in working capital cycle or over-leveraging could also pose risks.
Parag Milk Foods Share Price Targets 2029
In 2029, we expect Parag Milk Foods’ share price targets of ₹518.67 initially and ₹556.39 by year-end. Topline growth may moderate to 10-12% by 2029 as the company reaches scale. However, focus on cost optimization and operating leverage can enable 18-20% bottom line growth. ROE expansion to 20%+ levels could also boost valuations. Market share gains from fringe players could offer upside.
Parag Milk Foods Share Price Targets 2030
By 2030, Parag Milk Foods’ share price is forecasted to reach ₹577.89 initially and rise to ₹623.73 by year-end. This factors in revenue CAGR of 12-15% and EPS CAGR of 16-18% during the period. Valuations may remain elevated at 25-28x P/E owing to its leadership in value-added dairy products and strong brands. Execution of diversification into new product categories could act as catalyst.
Comparative Analysis with Competitors
| Company | Price (Rs.) | P/E | ROE (%) | ROCE (%) | Debt/Equity | Sales Growth (YoY) | Profit Growth (YoY)** |
|---|---|---|---|---|---|---|---|
| Parag Milk Foods | 261.65 | 28.85 | 10.07 | 10.15 | 0.65 | 40.86% | 112.94% |
| Bectors Food | 1,075 | 10.67 | 15.91 | 19.08 | 0.00 | 21.32% | 14.02% |
| Hindustan Foods | 542.35 | 11.63 | 18.97 | 19.11 | 2.61 | 12.53% | 5.51% |
| Dodla Dairy | 989.65 | 5.89 | 11.41 | 13.99 | 2.98 | 24.44% | 14.32% |
| HMA Agro Indus | 76.75 | 5.12 | 32.23 | 27.94 | 1.23 | 34.96% | 32.32% |
| Tasty Bite Eatables | 13,696.10 | 12.63 | 13.21 | 16.45 | 7.39 | 19.02% | 24.43% |
| Heritage Foods | 326.40 | 34.77 | 9.47 | 12.35 | 0.94 | 10.30% | 14.14% |
| Prataap Snacks | 1,249 | 47.83 | 3.22 | 1.20 | 1.80 | 22.53% | 22.44% |
| Vadilal Industries | 3,495.45 | 26.63 | 40.17 | 30.14 | 2.80 | 18.43% | 17.53% |
| ADF Foods | 197.40 | 29.06 | 15.69 | 21.00 | 6.14 | 24.21% | 11.13% |
SWOT analysis
Strengths:
- Revenue growth: The company has shown decent revenue growth of 40.86% in the last year.
- Efficient cash conversion cycle: The company has a healthy cash conversion cycle of 52.03 days, indicating efficient management of working capital.
- Liquidity: The company has a healthy liquidity position with a current ratio of 2.04.
Weaknesses:
- Poor profit growth: The company has shown a concerning negative profit growth of -8.92% over the past 3 years.
- Negative cash flow from operations: The company has negative cash flow from operations of -179.44 Cr., indicating difficulty in generating cash from its core business activities.
- Low ROE: The company has a poor ROE of -20.07% over the past 3 years, indicating low profitability.
- High debt-to-equity ratio: The company has a debt-to-equity ratio of 0.65, which is higher than the industry average.
Opportunities:
- Growing dairy market: The Indian dairy market is expected to grow at a CAGR of 12.5% by 2027, which could benefit the company.
- Expansion into new products and segments: The company can expand its product portfolio and enter new segments to drive growth.
- Improving operational efficiency: The company can improve its operational efficiency to reduce costs and improve profitability.
Threats:
- Competition: The dairy market is highly competitive, and the company faces competition from established players and new entrants.
- Volatility in input costs: The company is exposed to volatility in input costs such as milk prices, which can impact its profitability.
- Regulatory changes: The company is subject to government regulations, which can change and impact its business operations.
Future Outlook for Parag Milk Foods Share
Expert Opinions and Market Sentiments
Expert Opinions:
- FinStar: Rates the company with an “analytical rating” of 3 (out of 5), indicating a moderate buy.
- Analysts: Some analysts believe that the company’s recent price increase is due to short-term factors and that the long-term outlook is uncertain. Others believe that the company’s focus on new products and expansion could lead to future growth.
- Motilal Oswal: The company has a rating of “neutral
Market Sentiments:
- The stock is currently trading at a P/E ratio of 28.66, which is higher than the industry average.
- The stock has a relatively high beta of 1.63, indicating that it is more volatile than the market.
- The stock is down 16.2% year-to-date.
Growth Drivers and Challenges
Parag Milk Foods share price is currently ₹261.65, up 3.81% from its opening price. Let’s dive into the company’s growth drivers and challenges to understand its future potential.
Growth Drivers:
- Rising demand for dairy products: The Indian dairy market is expected to grow at a CAGR of 14% by 2026, driven by increasing urbanization, rising disposable incomes, and growing health awareness.
- Expanding product portfolio: Parag Milk Foods is expanding its product portfolio beyond traditional dairy products like milk and ghee, into value-added products like cheese, paneer, and yogurt. This diversification caters to evolving consumer preferences and potentially higher margins.
- Strong brand presence: The company has established strong regional brands like Gowardhan and Pride of Cows, which enjoy consumer loyalty. It is also expanding its distribution network, reaching new markets.
- Government initiatives: The Indian government is actively supporting the dairy sector through initiatives like the Dairy Processing Infrastructure Development Fund (DIDF) and Animal Husbandry Infrastructure Development Fund (AHIDF). These initiatives could benefit Parag Milk Foods’ expansion plans.
Challenges:
- Volatile input costs: Milk prices, a major input cost, are volatile due to seasonal fluctuations and supply chain disruptions. This can impact the company’s profitability.
- Intense competition: The Indian dairy market is highly competitive, with several established players and regional competitors.
- Limited cold chain infrastructure: Inadequate cold chain infrastructure in India leads to spoilage and wastage of milk, impacting profitability.
- Profitability concerns: The company’s profitability has been under pressure in recent years, with declining profit margins and negative cash flow.
Risk Assessment of Parag Milk Foods Share
Comprehensive Risk Analysis
Strengths:
- Efficient Cash Conversion Cycle: 52.03 days
- Healthy Liquidity Position: Current ratio of 2.04
- Low Debt: Debt/equity ratio of 0.65
Limitations:
- Poor Profit Growth: -8.92% over the past 3 years
- Poor Revenue Growth: 6.06% over the past 3 years
- Low ROE: -20.07% over the past 3 years
- Negative Cash Flow from Operations: -179.44 Cr.
Key Ratios:
- P/E: 28.85 (High and overvalued)
- EPS: ₹9.07
- ROE: 10.07% (Poor)
- ROCE: 10.15%
- Debt/Equity: 0.65 (Low)
- Current Ratio: 2.04
Investment Risks:
- Declining profitability: The company has shown poor profit and revenue growth in recent years.
- Negative cash flow: The company has negative cash flow from operations, which could limit its ability to grow and invest.
- Valuation: The stock is currently trading at a high valuation compared to its peers and its own historical performance.
- Competition: The dairy industry is competitive, and Parag Milk Foods faces competition from established players as well as new entrants
Mitigation Strategies
Financial Performance:
- Improve profitability:
- Focus on cost reduction measures to improve operating margins.
- Explore new product categories or markets with higher margins.
- Increase operational efficiency through automation and process improvements.
- Reduce debt:
- Focus on generating positive cash flow to reduce debt levels.
- Explore refinancing options with lower interest rates.
- Consider asset sales to free up cash.
- Improve return on equity (ROE):
- Increase profitability (see above).
- Manage equity effectively, potentially through share buybacks or reducing equity dilution.
Valuation:
- Reduce P/E ratio:
- Improve profitability as mentioned above.
- Manage investor expectations through clear communication and realistic guidance.
- Address overvaluation concerns:
- Demonstrate a clear path to improved financial performance.
- Highlight unique growth opportunities or competitive advantages
Conclusion
- Parag Milk Foods exhibits a healthy financial profile with strong revenue growth, improving profitability and stable capital structure.
- Its diverse dairy portfolio, wide distribution reach and brand equity make it well-positioned to capitalize on dairy consumption growth.
- Focus on high-margin value-added products and expansion in Southern/Eastern India can drive future growth.
- The stock offers long-term upside potential of over 150% in 7-8 years, driven by ~25% EPS CAGR.
- Effective risk mitigation across procurement, costs, forex exposure is critical for steady value creation.
Parag Milk Foods’ stock warrants continuous tracking by investors considering its growth potential, competitive strengths and risks. Dynamic monitoring of financial metrics, industry trends, product pipeline and peer comparison is advised to make timely and informed investment decisions. The long-term growth thesis remains intact despite near-term challenges. Deep understanding of business fundamentals is key for investors to benefit from the India dairy consumption story.
Creditable Sources
Financial Reports:
- Parag Milk Foods Ltd. Annual Report [Year]: https://www.paragmilkfoods.com/investors.php
- Quarterly Results: https://www.paragmilkfoods.com/investors.php
Analyst Reports:
- Equitymaster Parag Milk Foods Analysis: https://www.equitymaster.com/help/the-equitymaster-way.asp
- Motilal Oswal Parag Milk Foods Report:
News Articles:
- The Economic Times: https://economictimes.indiatimes.com/parag-milk-foods-ltd/stocks/companyid-45605.cms
- Business Standard
Disclaimer: This analysis of Parag Milk Foods share price targets is for informational purposes only, not investment advice. I’m not a SEBI-authorized expert. Data and analysis are based on public info and AI tools, but may not be fully accurate or timely. Market conditions and company performance can change, leading to actual results differing from projections. Always do your own research and consult a qualified financial advisor before making any investment decisions