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INVESTMENT INSIGHTS

Check Before You Invest : Parag Milk Foods Ltd

BSE: 539889 NSE: PARAGMILK ISIN: INE883N01014
  |   Sector:  FMCG   |   Industry:  Consumer Food

Snapshot

Q.1 Which industry/sub-sector does Parag Milk Foods Ltd belong to?
Parag Milk Foods Ltd belongs to the FMCG sector, operating specifically within the Consumer Food segment.
Q.2 Is Parag Milk Foods Ltd a good quality company?
Parag Milk Foods Ltd is a average quality company, based on a somewhat consistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Parag Milk Foods Ltd undervalued or overvalued?
Parag Milk Foods Ltd appears Fair, as its key valuation ratios are in line with their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 19.61 23.58
Price to Book 2.1 2.37
Price to Sales 0.69 0.73
EV to EBITDA 10.22 11.45
Q.4 Is Parag Milk Foods Ltd a good buy now?
Parag Milk Foods Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Parag Milk Foods Ltd?
Parag Milk Foods Ltd revenue growth is 9.4% for FY-2025, which is above its 5-year CAGR of 7.08%, indicating faster growth.

Q.2 Gross Profit margin of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Gross profit margin which is the profit after deduction of direct costs, is 5.5% for FY-2025, which is above its 5-year median of 4.4%, indicating increasing margins.

Q.3 Operating Profit Margin of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 6.31% for FY-2025, which is in line with its 5-year median of 6.31% indicating stable margins.

Q.4 Net Profit Margin of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Net Profit Margin is 3.46% for FY-2025, is above its 5-year median of 1.84%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 5.5 4.4
Operating Profit Margin (%) 6.31 6.31
Net Profit Margin (%) 3.46 1.84

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Return on Asset is 6.07%, which is above its 5-year historical median of 3.48%, indicating improved asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Return on capital employed is 14.4% for FY-2025, which is above its 5-year historical median of 8.6%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

Q.7 Return on Equity (ROE) of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Return on equity is 12.28% for FY-2025, which is above its 5-year historical median of 7.86%, indicating the business is making better use of its shareholders capital.

Q.8 Cash conversion cycle of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Cash conversion cycle is 56 days, below its 5-year historical median of 64 days, indicating improved working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 1.86 1.86
ROE (%) 12.28 7.86
ROCE (%) 14.4 8.6
Cash Conversion Cycle 56 days 64 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Debt-to-Equity ratio is 0.60, which is above the industry average of 0.49, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Parag Milk Foods Ltd?
Parag Milk Foods Ltd Debt to cash flow from operations is 2.9, which is at a moderate level.

Ownership & governance

D: Promoter shareholding and pledge status of Parag Milk Foods Ltd?

Q.1 Promoter shareholding and pledge status of Parag Milk Foods Ltd?
Promoters hold 40.65% of the Parag Milk Foods Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Parag Milk Foods Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Parag Milk Foods Ltd vs industry peers?
Parag Milk Foods Ltd revenue CAGR is 7.08%, compared to the industry median CAGR of 7.03%, indicating stable growth and maintaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 9.4 7
Gross Profit Growth (%) 37 13.3
Operating Profit Growth (%) 6.5 12.6
Net Profit Growth (%) 30.8 20.7
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 1.86 1.2
ROE (%) 12.28 7.22
ROCE (%) 14.4 11.34
Cash Conversion Cycle (days) 56.05 48

Valuation & price assessment

Q.1 Stock return of Parag Milk Foods Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of -1.5% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 -1.5% 8.4% 25.4% -1.3%
Q.2 Valuation ratios of Parag Milk Foods Ltd vs historical?
The current P/E ratio of 19.61 is lower than its historical median of 23.58, indicating that the stock is trading below its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 19.61 23.58 26.55
Price to Book 2.1 2.37 2.53
Price to Sales 0.69 0.73 1.43
EV to EBITDA 10.22 11.45 14.38

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