DODLA DAIRY LTD Q2 CONCALL: Q3 EBITDA MARGIN RECOVERY TARGET OF 7.5–8%, STRONG AFRICA GROWTH, MAHARASHTRA EXPANSION, OSAM TURNAROUND & VALUE-ADDED DAIRY PRODUCTS

• Management expects Q3 FY27 EBITDA margin to recover to approximately 7.5–8%, supported by the full-quarter benefit of milk selling-price increases implemented mainly in September 2026. • Management indicated that EBITDA margins could remain around 7.5–8% in subsequent quarters, provided milk procurement costs and other operating conditions do not deteriorate materially. • Management expects the larger core India dairy business to be the principal contributor to the anticipated margin recovery. • Management believes milk procurement prices have broadly peaked and expects them to remain elevated but relatively stable over the next two quarters. • Management expects the September selling-price increase of approximately ₹2.50 per litre to provide a more meaningful benefit from Q3 FY27 onward. • Management does not currently anticipate another immediate milk selling-price increase unless procurement costs or industry pricing conditions change. • Management indicated that additional price increases could be considered if major dairy cooperatives raise their selling prices. • Management expects the gap between milk selling realizations and procurement costs to improve as recent price increases are fully reflected in revenue. • Management expects procurement cost stability to be an important factor in restoring profitability after Q2 margin compression. • Management remains focused on improving operating efficiency and controlling packaging, logistics and other expenses. • Management expects the Africa business to maintain growth momentum through distribution expansion, market penetration and new production capacity. • Management is developing a greenfield dairy facility in Uganda, with operations targeted around the beginning of FY28. • Management indicated that approximately 70 acres have been acquired in Uganda for the proposed facility. • Management confirmed that civil construction for the Uganda greenfield project is already underway. • Management expects the Uganda facility to support additional production capacity and future expansion of its African operations. • Management is pursuing market-share gains in Kenya through competitive pricing, distribution expansion and improvements in its milk procurement network. • Management expects African operations to remain an important contributor to consolidated revenue growth. • Management is targeting an EBITDA margin of approximately 4–5% for Osam Dairy during Q3–Q4 FY27. • Management indicated that Osam's profitability improvement will depend on procurement efficiency, operating stabilization and better cost absorption. • Management is prioritizing stabilization of Osam's existing operations rather than aggressive near-term sales expansion. • Management has upgraded plant equipment and operating systems at Osam to improve efficiency and support its turnaround. • Management is gradually transitioning Osam's milk procurement toward a direct-farmer-payment model. • Management indicated that approximately 25–30% of Osam procurement had transitioned to the new model. • Management targets approximately 70–80% of Osam procurement under the direct-farmer-payment model by March 2027. • Management expects the procurement transition to improve milk sourcing efficiency, farmer relationships and operational control. • Management acknowledged that competition remains intense in Bihar and Jharkhand, creating pressure on pricing and market-share expansion. • Management sees longer-term growth potential for value-added dairy products in Bihar and Jharkhand as consumer affordability improves. • Management expects Maharashtra liquid milk operations to commence around March–April 2027. • Management expects Maharashtra milk powder operations to commence around September 2027. • Management views Maharashtra expansion as an important medium-term growth driver for milk processing, distribution and value-added products. • Management indicated that the earlier combined investment estimate of approximately ₹600 Cr, including the Osam acquisition, remains broadly intact. • Management cautioned that project costs could increase approximately 5–10% because of inflation and execution-related expenses. • Management is considering an additional cattle-feed facility in Maharashtra, although a final investment decision has not been announced. • Management expects higher milk processing capacity and improved distribution reach to support future business expansion. • Management intends to expand its presence in year-round value-added dairy categories such as paneer and ghee. • Management expects greater contribution from year-round dairy products to reduce dependence on seasonal summer demand. • Management expects festive demand to support categories such as ghee and traditional sweets. • Management sees further growth opportunities in curd, paneer, buttermilk, lassi, ice cream and flavoured milk. • Management indicated that ice cream and flavoured milk remain seasonally sensitive, while paneer and ghee offer opportunities for more consistent demand. • Management expects value-added products to remain an important long-term driver of revenue growth and product diversification. • Management highlighted strong profitability in curd and selected beverage categories, supporting continued product-mix expansion. • Management expects higher value-added product volumes to contribute to future growth, subject to raw-material costs and competitive conditions. • Management announced a proposed joint venture with Meadows India Holdings Limited to explore B2B dairy and food ingredients. • The proposed joint venture would have Dodla Dairy holding 40% and Meadows holding 60%. • Dodla's proposed initial investment in the joint venture is approximately ₹1 Cr. • Management indicated that the joint venture will initially explore specialized skimmed milk powder and tailored dairy ingredients. • Management sees potential future opportunities in food-industry ingredients, including ice-cream inclusions and caramel-based products. • Management clarified that the proposed joint venture remains subject to definitive agreements and necessary approvals. • The joint venture is an early-stage strategic initiative and does not yet represent an established revenue contributor. • Management expects the cattle-feed business to benefit from demand growth, although profitability remains sensitive to raw-material prices. • Management highlighted maize price inflation as an important risk for cattle-feed profitability. • Management indicated that demand for maize from ethanol and compressed biogas industries could increase competition for feed raw materials. • Management expects cattle-feed margins to depend on the company's ability to pass higher input costs through to customers. • Q2 FY27 revenue from operations increased approximately 17.4% YoY to ₹1,196 Cr, supported by higher milk volumes, improved selling realizations and African business growth. • Q2 gross profit stood at approximately ₹275.7 Cr. • Q2 gross profit margin stood at approximately 23.1%. • Q2 EBITDA stood at approximately ₹64.1 Cr, reflecting pressure from elevated milk procurement and operating costs. • Q2 EBITDA margin stood at approximately 5.4%, significantly below management's expected Q3 margin range. • Q2 profit after tax stood at approximately ₹36.6 Cr. • Q2 PAT margin stood at approximately 3.1%. • Employee expenses stood at approximately ₹55 Cr during Q2 FY27. • Other operating expenses stood at approximately ₹156.6 Cr. • Depreciation expense stood at approximately ₹23.6 Cr. • Other income stood at approximately ₹10.9 Cr. • H1 FY27 revenue increased approximately 18.2% YoY to ₹2,394 Cr. • H1 gross profit stood at approximately ₹554 Cr, with a gross margin of 23.1%. • H1 EBITDA stood at approximately ₹129 Cr. • H1 profit after tax stood at approximately ₹77.2 Cr, representing a PAT margin of 3.2%. • H1 profitability included a deferred tax charge of approximately ₹5.77 Cr. • Milk procurement increased approximately 9.3% YoY to 21.3 lakh litres per day. • Milk sales increased approximately 8.4% YoY to 14.2 lakh litres per day. • Average milk procurement cost increased to approximately ₹43.20 per litre from ₹37.30 per litre in Q2 FY26. • Average milk selling realization increased to approximately ₹61.90 per litre from ₹57.30 per litre a year earlier. • The spread between average selling realization and procurement cost declined to approximately ₹18.70 per litre from ₹20 per litre in Q2 FY26. • Management identified the faster increase in procurement costs relative to selling prices as a major reason for Q2 margin compression. • Packaging inflation and higher logistics expenses added further pressure to operating profitability. • India value-added product revenue increased approximately 11.7% YoY to ₹327 Cr from ₹292.8 Cr. • Management indicated that the absence of the previous year's bulk ghee sales and seasonal demand patterns affected reported value-added product growth. • Curd and curd-based product volumes increased approximately 23% YoY to 444.7 metric tonnes per day. • Paneer volumes increased approximately 64%, reflecting strong growth from a relatively smaller base. • Management indicated that paneer volumes increased by approximately 2.5 tonnes per day. • Lassi volumes increased approximately 163%, although management highlighted the relatively small comparison base. • Management described curd profitability at approximately 12% EBITDA margin and 19% gross margin. • Management described margins in buttermilk and lassi at approximately 20–23%, as stated during the call. • Africa revenue increased approximately 56% YoY to ₹179 Cr, making it an important growth contributor. • African milk sales volumes increased approximately 68.5% YoY. • Management attributed African business momentum to stronger volumes, distribution expansion and market development. • Osam Dairy reported Q2 revenue of approximately ₹82.37 Cr. • Osam milk sales stood at approximately 1.33 lakh litres per day. • Osam EBITDA margin declined to approximately 1% from around 2.65% in the previous quarter. • Management expects procurement reforms and operating improvements to support Osam's targeted margin recovery. • Cattle-feed revenue increased approximately 40% YoY, although profitability was affected by raw-material inflation. • Current cattle-feed production stood at approximately 6,000–7,000 tonnes against available capacity of approximately 8,000–9,000 tonnes. • H1 FY27 capital expenditure stood at approximately ₹66 Cr. • Inventory stood at approximately ₹232 Cr during H1 FY27. • The company built approximately ₹76 Cr of additional skimmed milk powder and butter inventory to support future demand. • Cash and bank balances stood at approximately ₹659.4 Cr as of September 2026, providing liquidity for expansion and working-capital requirements. • Key risks include persistently high milk procurement costs, delayed selling-price increases, packaging inflation and logistics expenses. • Additional risks include weather-related milk availability, procurement volatility and the possibility of further raw-material inflation. • Osam's low profitability and competitive conditions in Bihar and Jharkhand remain important turnaround risks. • Expansion-related risks include delays in commissioning the Uganda and Maharashtra facilities, project cost escalation and slower-than-expected capacity utilization. • Cattle-feed profitability remains exposed to maize price inflation and competition for agricultural raw materials. • Overall outlook remains cautiously positive, supported by strong revenue growth, healthy milk volumes, rapid African expansion and increasing value-added product sales. • The most important near-term monitorable is whether Q3 FY27 EBITDA margin recovers to management's expected 7.5–8% range from 5.4% in Q2. • Other key monitorables include milk procurement cost stability, Osam's targeted 4–5% EBITDA margin, Maharashtra commissioning timelines and progress on the Uganda facility. • Management's margin recovery expectations remain conditional on stable procurement costs, realization improvements and the absence of significant adverse operating developments. • The supplied source is a machine-generated earnings-call transcript, and management guidance represents forward-looking expectations rather than assured financial outcomes.

DODLA DAIRY LIMITED

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