Milky Mist IPO Explained: Offer Size, Promoter Exit Plans, Strong Profits, and Potential Risks

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Milky Mist intends to utilize Rs 750 crore from the proceeds of the new issue for repaying or prepaying loans.  The company’s total consolidated borrowings, comprising secured and unsecured debt, amounted to Rs 1,463.59 crore as of May 31, 2025.  It is crucial to lessen this burden, particularly as the company gears up for its next scaling phase.

In addition, an investment of Rs 414.7 crore will be made to expand and modernise the Perundurai manufacturing facility, which is currently the company’s only production base.  This encompasses additional capacity for yogurt, whey protein concentrate, and cream cheese — all of which are expanding categories that correspond with the increasing urban demand for premium, health-oriented dairy products.

To enhance its cold chain and in-store presence, an extra allocation of Rs 129.4 crore has been made for the installation of visi coolers, ice cream freezers, and chocolate coolers.  The remaining proceeds will be allocated to general corporate purposes.

Additionally, the IPO encompasses a secondary component: a promoter group offer-for-sale valued at ₹250 crore.  Managing Director Sathishkumar T will divest shares valued at Rs 150 crore, and Anitha S will offload shares worth Rs 100 crore.

At the time of the DRHP filing, promoters Sathishkumar T and Anitha S held a combined 92.39% stake in the company.  Although their combined stake will be diluted after the listing, they are anticipated to maintain majority control.

In FY24, Milky Mist’s revenue from operations surged by 29%, increasing from Rs 1,821.6 crore in the previous year to Rs 2,349.5 crore.  Compared to Rs 19.4 crore in FY23, net profit sharply increased by 137 percent to Rs 46 crore.  The EBITDA was Rs 310.4 crore, which equates to a margin of 13.2 percent.

These margins are significantly influenced by the company’s emphasis on value-added dairy products (VADPs) like paneer, curd, yogurt, cheese, butter, ghee, and ice cream.  Unlike conventional dairy brands, Milky Mist does not offer liquid milk.  This results in enhanced pricing power and improved gross margins, aligning it more closely with an FMCG company than with a dairy cooperative.

In FY24, about 75.4% of Milky Mist’s revenue was generated from daily-use staples such as curd and paneer.  The company’s capacity to generate revenue through innovation, rather than merely volume expansion, is illustrated by the contribution of new product launches—defined as SKUs introduced in the last two years—which amounted to Rs 511 crore.

As of March 31, 2025, Milky Mist employed a total of 1,524 individuals, comprising both skilled and unskilled workers.  This represents a decrease from the previous year’s total of 1,694 employees.  Despite the reduction in overall headcount, attrition showed improvement.  In FY25, the overall attrition rate for the company decreased to 34 percent, down from 41 percent in FY24.

The churn story presents a mixed picture: at the close of FY25, the attrition rate for unskilled workers was high at 69%, whereas for skilled employees it was significantly lower at 27%.  The DRHP links this pattern to greater job fluidity among blue-collar workers and industry-wide trends related to contract-based positions.

Even with the promising figures, the DRHP highlights various possible risks.  Initially, the company relies completely on its Perundurai plant.  Operations could be severely impacted by any disruption, whether caused by a natural disaster, technical failure, or labor unrest.  There is no alternative production facility established.

Secondly, the company’s distribution network depends greatly on a limited number of super stockists and distributors.  Milky Mist, although present across India, shows a regional skew — 71 percent of its revenue is derived from southern states such as Tamil Nadu and Karnataka, which exposes it to geographic concentration risk.

Thirdly, the costs of input remain unstable.  The company’s largest raw material is raw milk, and unless pricing fluctuations are carefully managed, they can squeeze margins.  It may not always be viable to transfer expenses to consumers who are sensitive to prices, particularly in the curd and paneer segments.

At last, rivalry is fierce.  Milky Mist competes with national FMCG behemoths such as Nestlé India and Britannia, in addition to well-known dairy experts like Amul, Hatsun Agro, Dodla Dairy, and Parag Milk Foods.  They all offer greater financial resources, wider brand awareness, and nationwide reach.

It is worth mentioning that K. Rathnam, the CEO of Milky Mist, worked for more than ten years at Amul, which is the largest dairy brand in India. This experience could benefit the company as it grows.

By concentrating on value-added products, premium positioning, and tightly controlled operations, Milky Mist has established a niche for itself in India’s fragmented dairy sector.  Its initial public offering is an attempt to expand this model further, lower debt, and fund new growth drivers.  The fundamentals appear promising, with profits increasing, margins remaining stable, and expansion underway.

However, the market’s reward will hinge on execution, pricing discipline, and the effectiveness of its expansion beyond its southern base — while avoiding any detrimental effects.