Milky Mist, an Erode-based dairy company founded by school dropout T Sathish Kumar, is preparing for an initial public offering (IPO) at a valuation of Rs 20,000 crore. This move comes after the company’s discussions with private equity firm WestBridge fell through. Milky Mist ended FY24 with a turnover of Rs 2,000 crore and a profit of around Rs 50 crore, positioning itself as a formidable competitor in the dairy industry.
The Journey to IPO:
Milky Mist, which started as a milk trading company in 1985, took off in 1994 when it began producing paneer (cottage cheese). Over the years, it has expanded its product portfolio to include curd, butter, cheese, yogurt, and ice cream. The company’s focus on value-added products has helped it tap into an upwardly mobile consumer base in India.
Founder T Sathish Kumar, his wife Anitha Sathish Kumar, and CEO K Rathnam, who was previously the managing director at Amul Dairy, lead the company. Rathnam confirmed that Milky Mist does not intend to raise money from private investors and will instead pursue an IPO.
Also Read :Bharti Hexacom Stock Rises 9.5% as JPMorgan Initiates Coverage with ‘Overweight’ Rating
Funding Challenges:
Milky Mist has attempted to raise private capital several times in the past decade but has faced challenges in closing deals. The company’s reluctance to give up control has been a significant hurdle in securing private funding. Despite this, Milky Mist took out a bank loan of around Rs 450 crore from a consortium of banks, including Bank of Maharashtra, Indian Overseas Bank, Union Bank, and RBL, to fund its expansion plans. The company received an interest subvention from the government’s Department of Animal Husbandry and Dairying, reducing the effective interest rate to 6%.
Financial Performance:
In FY23, Milky Mist reported a revenue of Rs 1,437 crore, a 42% increase from Rs 1,015 crore in FY22. However, its profit fell by 13% to Rs 28 crore. In FY24, the company closed with a top line of around Rs 1,950 crore and generated a profit of Rs 50 crore.
Market Position and Future Plans:
Milky Mist is positioning itself as a competitor to Amul, aiming to cater to the same market segment. With an expanding product portfolio, the company plans to grow its presence in the north, west, and other regions of India. A public market listing will help boost its visibility and presence as it looks to tap into new markets.
Milky Mist’s valuation will be benchmarked against peers like Hatsun Agro, which has a market capitalisation of around Rs 25,000 crore and trades at a 3-4X multiple on sales. The company aims for a valuation in the Rs 20,000-25,000 crore range and plans to go public no later than 2026.
Conclusion:
Milky Mist’s journey from a milk trading company to a leading dairy brand is a testament to its founder’s entrepreneurial spirit and the company’s strategic growth initiatives. The planned IPO at a Rs 20,000 crore valuation marks a significant milestone in its growth trajectory, setting the stage for further expansion and competition with industry giants like Amul.