Raw milk production in India is expected to slow to 4 per cent this fiscal, down from a 5 per cent compound annual growth rate between FY20 and FY25, as El Niño-linked weather disruptions and rising fodder costs weigh on cattle yields. Yet organised dairy companies are projected to grow revenues by 13-15 per cent, up from around 11 per cent last year, highlighting how branded processors are increasingly relying on pricing and higher-value products rather than milk volumes to sustain growth.For organised dairies, the challenge this year is likely to be securing enough milk rather than finding consumers. While weather-led disruptions are constraining supply, resilient demand for everyday dairy products, phased price increases and faster growth in value-added offerings are expected to keep revenue growth well ahead of milk production. The shift underscores how organised dairies are becoming increasingly dependent on product mix and branding, rather than milk volumes alone to drive growth.CRISIL Ratings expects organised dairies to post 8-10 per cent volume growth this fiscal despite tighter milk supplies. Average retail prices are expected to rise 5-6 per cent, helping companies offset higher procurement costs while keeping operating margins broadly steady at around 4 per cent.Weather squeezes milk supplyWeather-related disruptions and rising fodder costs are expected to slow milk production and increase procurement costs for processors.“The manifestation of El Niño conditions, resulting in a harsh summer and a below-average monsoon, will impact cattle yields this fiscal,” said Shounak Chakravarty, Director, CRISIL Ratings.“Coupled with rising fodder costs, this will slow down growth in the production of raw milk to 4 per cent on-year, compared with the compound annual growth rate of around 5 per cent between fiscals 2020 and 2025.”CRISIL expects milk procurement prices to rise 4-5 per cent this fiscal, prompting companies to raise retail prices in phases. Average retail prices across dairy products are expected to increase 5-6 per cent, with sharper hikes in value-added categories.Staple demand and premium products support growthDemand for milk and traditional dairy products such as butter and ghee is expected to remain resilient because they continue to be everyday household essentials, allowing organised dairies to sustain 8-10 per cent volume growth despite higher prices.At the same time, companies are expanding portfolios of protein-rich, probiotic and other value-added dairy products to tap growing consumer interest in health and nutrition. Although these products account for less than 5 per cent of the market today, CRISIL expects the segment to grow at more than 20 per cent, making it one of the fastest-growing categories in the dairy industry.The ratings agency also expects increasing consumer preference for branded products over unorganised offerings to support growth for organised players.Margins stay steady despite rising costsThe expected acceleration in revenue is unlikely to translate into higher profitability.Operating margins are projected to remain broadly unchanged at around 4 per cent, as phased price increases are expected to largely offset higher procurement and other input costs rather than expand margins.Healthy balance sheets support capexStronger cash generation is expected to help organised dairies continue investing in processing capacity and manufacturing facilities without materially weakening their balance sheets.“Healthy growth prospects, along with higher accruals from increasing scale, are expected to sustain capex intensity in line with the past four-year average,” said Rucha Narkar, Associate Director, CRISIL Ratings.“Despite the debt-funded capex, credit profiles are expected to remain stable, supported by healthy cash generation and strong balance sheets. Debt metrics are expected to improve, with debt-to-EBITDA declining to around 2.3 times this fiscal from 2.5 times last fiscal, while interest coverage is projected to remain strong at over six times compared with 5.6 times last fiscal.”Published on June 29, 2026