The initial public offering (IPO) of Temasek-backed Milky Mist Dairy Food will open for subscription on Tuesday, August 11, and close on August 13.
Milky Mist Dairy Food has fixed the at ₹133-140 per share. Retail investors can bid for a minimum of one lot comprising 107 equity shares and in multiples thereafter. At the upper end of the price band, the minimum investment stands at ₹14,980.
The IPO values the company at around ₹10,778 crore at the upper end of the price band, a little over half the market capitalisation of listed peer Hatsun Agro Product.
What should investors do?
SBI Securities: Subscribe
SBI Securities has recommended investors subscribe to the issue, citing Milky Mist’s focus on value-added dairy products (VADP), which typically command higher margins than the traditional liquid milk business.
The brokerage said that Milky Mist’s revenue, EBITDA and profit after tax grew at CAGRs of 31.3%, 40.5% and 155.6%, respectively, between FY24 and FY26. Its EBITDA margin stood at 13.7% in FY26, up 70 basis points YoY and 180 basis points from FY24.
At the upper price band, the IPO is valued at a post-issue FY26 price-to-earnings multiple of 84.9x. Milky Mist plans to use ₹497 crore of the IPO proceeds to repay debt, which is expected to lower interest costs. SBI Securities expects this, along with higher capacity utilisation, to support high double-digit earnings growth going forward.
SMIFS: Subscribe for long term
SMIFS has recommended subscribing to the issue as a long-term investment, citing Milky Mist’s differentiated business model, integrated operations, strong execution capabilities and multiple long-term growth drivers.
Anand Rathi: Subscribe – Long Term
Anand Rathi said Milky Mist is valued at an implied P/E of 84.9x based on FY26 earnings at the upper price band. While its strong revenue growth, leadership in key value-added dairy categories and premium positioning could justify a valuation premium, the brokerage said the IPO appears fully priced at the upper band.
It has therefore assigned a “Subscribe – Long Term” rating to the issue.
IPO details
The Tamil Nadu-based dairy products maker has reduced the size of its IPO to ₹1,553 crore from the earlier planned ₹2,035 crore following a pre-IPO stake sale to Jongsong Investments, a subsidiary of Singapore state investor Temasek.
The IPO comprises a fresh issue of shares worth ₹1,428.2 crore and an offer for sale (OFS) of ₹125 crore by existing shareholders.
Around 50% of the issue has been reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs) and the remaining 35% for retail investors.
Temasek’s Jongsong Investments currently owns around 5.2% of Milky Mist after acquiring shares at ₹139.76 apiece through a pre-IPO placement in April.
The company manufactures a range of dairy products, including cheese, butter, paneer, ghee, yoghurt and ice cream. It plans to use the IPO proceeds to repay debt and expand and modernise its flagship manufacturing facility at Perundurai in Tamil Nadu.
Growth and margins
Milky Mist said it has been growing at more than 30% annually over the past several years and believes it can sustain that pace even as the business scales up.
Whole-time Director and Chief Executive Officer K Rathnam said the dairy products industry is growing at around 12-20% in value terms, while Milky Mist is growing at more than 30%. He added that the company’s volume growth is around 25-30%, with value growth exceeding 30%.
Milk prices remain a key variable for the company, with procurement costs typically moving in cycles every two to four years.
Rathnam said value-added products such as paneer and cheese carry significantly higher margins than liquid milk, giving the company some cushion against volatility in raw milk costs.
He also highlighted Milky Mist’s milk-balancing system, which he said helps the company sustain margins.
Within its portfolio, paneer and cheese have the highest margins, while ghee and, to a lesser extent, yoghurt and ice cream have lower margins. Rathnam said this reflects the broader industry margin structure rather than a weakness specific to Milky Mist.
As part of the OFS, promoter Sathishkumar T and his wife will sell a portion of their stake. Promoter holding is expected to fall to 79% after the issue, and the company will need to reduce it further to 75% within three years to comply with minimum public shareholding requirements.
Milky Mist’s listed peers have faced margin pressure this year amid elevated milk procurement costs and broader weakness in the market.
Axis Capital, JM Financial and IIFL Capital Services are the book-running lead managers to the issue.
The company’s shares are expected to list on the BSE and NSE on August 18.