Hatsun Agro Product, a leading Indian milk processing firm, announced on Wednesday that its quarterly profit had surged by an impressive 54%. This notable growth was achieved by skillfully offsetting the impact of rising input costs with the advantage of higher milk prices, driven by the strong demand the company experienced in the market.
During the June quarter, milk prices in India reached their highest point due to decreased production and strong demand. Additionally, the concurrent summer season in the same quarter amplified the demand for ice-creams and curds.
The company, renowned for its product lines such as Arun Ice Cream and Arokya Milk, announced a surge in its post-tax profit to 801.6 million rupees ($9.8 million) for the quarter that concluded on June 30. This marked a significant increase compared to the 519.5 million rupees recorded during the same quarter in the previous year.
The company’s revenue witnessed an impressive growth of almost 7% year-on-year, reaching 21.51 billion rupees.
However, the Chennai-based company said its raw material costs rose nearly 12% to 15.14 billion rupees, accounting for nearly three-fourths of the total expenses.
In order to safeguard their profit margins, dairy companies in India maintained the prices of their products at the same level, even during periods when procurement prices experienced a decline.
According to analysts at ICICI Securities, stabilization was observed in cattle feed prices within the dairy sector during the quarter.
The company sources milk from several southern states, such as Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka, along with the western state of Maharashtra. Analysts have noted that this region experienced a decrease in milk inflation during the first half of the year.
The analysts anticipate a continued decline in milk procurement prices during the upcoming quarters, attributed to the onset of the monsoon season and the commencement of the flush season.
Hatsun Agro Product announced an interim dividend of six rupees per share, with its stock closing 0.65% higher before the release of the results.
