Synopsis : Milky Mist Dairy Foods’ Rs 1,553-crore IPO has attracted strong investor demand despite being valued at nearly 85x FY26 earnings. Brokerages remain positive on its long-term prospects, citing its higher-margin value-added dairy portfolio, strong growth, category leadership and IPO-led debt reduction.
Milky Mist Dairy Foods’ IPO has put a spotlight on an interesting question for investors: should the company be valued like a traditional dairy business, or should it command the kind of premium typically given to fast-growing FMCG companies?
The Rs 1,553-crore IPO opened for subscription on August 11 and closed on August 13, with the issue priced in the range of Rs 133-140 per share.
While investor interest remained strong, one number has attracted particular attention — Milky Mist’s valuation.
At the upper price band of Rs 140, the company is valued at nearly 85 times its FY26 earnings. Despite this demanding valuation, several brokerages have maintained a positive long-term view on the IPO.
Milky Mist IPO subscription status
Milky Mist received strong investor interest during the three-day bidding period.
The issue was subscribed 2.42 times by the end of the second day. By the final day of bidding, subscription had jumped sharply, with the issue subscribed around 54.57 times.
The strong subscription indicates significant investor demand, although subscription numbers alone do not determine whether the IPO is attractively valued.
Milky Mist IPO GMP
The grey market also indicated a positive sentiment around the IPO.
Milky Mist shares were commanding a grey market premium of around Rs 22, which represented a premium of nearly 16% over the upper issue price of Rs 140.
However, investors should be careful while interpreting GMP data.
Grey market premiums are unofficial indicators and can change quickly depending on market sentiment, demand and broader market conditions. They also do not guarantee the listing performance of a stock.
Why is Milky Mist different from traditional dairy companies?
The key part of the Milky Mist story is its focus on value-added dairy products, or VADP.
These include products such as paneer, cheese and yoghurt.
Traditional dairy businesses often have significant exposure to liquid milk, which generally operates at relatively lower margins. Milky Mist, on the other hand, has built its business around processed, branded and higher-value dairy products.
This gives the company characteristics that are closer to a branded FMCG business than a conventional liquid-milk company.
SBI Securities highlighted this difference in its IPO research, noting that Milky Mist focuses primarily on value-added dairy products, which generally offer higher margins than the traditional liquid milk business.
This business mix is one of the key reasons brokerages believe the company could justify a valuation premium over conventional dairy peers.
Strong growth is supporting the premium valuation
Milky Mist has delivered strong financial growth in recent years.
Between FY24 and FY26, the company’s revenue, EBITDA and profit after tax grew at compound annual growth rates of approximately 31.3%, 40.5% and 155.6%, respectively.
The company has also improved its operating profitability.
Its EBITDA margin increased to 13.7% in FY26 from 13% a year earlier, while the margin had stood at around 11.9% in FY24.
The improvement suggests that Milky Mist has been able to combine strong revenue growth with increasing operating efficiency.
Aditya Birla Money pointed to this trend, highlighting the company’s strong revenue CAGR and expansion in EBITDA margins between FY24 and FY26.
IPO proceeds could help reduce debt
Another factor that could support Milky Mist’s earnings is deleveraging.
The company plans to use around Rs 497 crore from the IPO proceeds to repay debt.
Reducing debt could lower interest costs and strengthen the company’s balance sheet.
For investors taking a long-term view, this could become an important part of the investment story because lower interest expenses could provide additional support to profitability as the business continues expanding.
But is 85x earnings too expensive?
This remains the biggest concern surrounding the IPO.
At the upper price band of Rs 140, Milky Mist is valued at nearly 85 times its FY26 earnings.
That is a substantial premium compared with many traditional dairy companies.
The valuation therefore leaves relatively little room for disappointment.
For the premium to be justified over the long term, Milky Mist would need to maintain strong revenue growth, expand margins, increase its market share and successfully build its branded value-added dairy portfolio.
In other words, investors are not simply paying for the company’s current earnings. They are paying a significant premium for its expected future growth.
What are brokerages saying?
Despite the expensive valuation, several brokerages have maintained a positive view on Milky Mist’s long-term prospects.
Anand Rathi Research
Anand Rathi Research highlighted the company’s strong revenue growth, leadership in key value-added dairy categories and premium positioning.
The brokerage believes these factors could allow Milky Mist to command a valuation premium.
However, it also acknowledged that the IPO valuation at the upper price band appears fully priced.
Anand Rathi therefore assigned a ‘Subscribe – Long Term’ rating.
Geojit Securities
Geojit Securities also acknowledged the premium valuation.
At Rs 140, the brokerage calculated that Milky Mist was valued at around 85 times FY26 earnings, which is higher than industry peers.
However, Geojit pointed to the company’s leadership in value-added dairy products, strong growth profile, improving profitability and scalable FMCG-oriented business model.
The brokerage therefore recommended a ‘Subscribe’ rating for investors with a medium- to long-term investment horizon.
Aditya Birla Money
Aditya Birla Money also remained positive on the issue.
The brokerage highlighted Milky Mist’s differentiated value-added dairy model, category leadership and brand-led pricing power.
It acknowledged that the roughly 85x FY26 P/E valuation is demanding, but argued that the premium could be supported by the quality of growth, category leadership and debt reduction following the IPO.
The brokerage recommended ‘Subscribe’ to the IPO.
Dairy company or FMCG company?
That is ultimately the central debate surrounding Milky Mist.
If investors value the company purely as a traditional dairy player, an 85x earnings multiple could appear extremely expensive.
But if Milky Mist successfully establishes itself as a high-growth branded FMCG company with strong positions in value-added dairy categories, the premium valuation becomes easier to understand.
Its focus on paneer, cheese, yoghurt and other processed dairy products gives it exposure to categories where branding, distribution and pricing power can potentially support higher margins.
The company’s future growth will therefore depend not only on the overall expansion of India's dairy market but also on its ability to capture a greater share of the organised and branded segment.
What should investors watch after the IPO?
The biggest factors to monitor will be revenue growth, EBITDA margins, market-share gains, new product launches, distribution expansion and debt reduction.
Investors should also watch whether Milky Mist can maintain its rapid earnings growth after becoming a listed company.
The valuation makes execution particularly important.
A company trading at around 85 times earnings needs to deliver strong growth consistently. Any slowdown in revenue, margins or profitability could put pressure on the valuation.
At the same time, continued category leadership, successful expansion and improving cash flows could help the company gradually grow into its premium valuation.
Conclusion
Milky Mist’s IPO presents an interesting combination of strong growth, a differentiated value-added dairy business and a demanding valuation.
The company’s focus on branded dairy products, improving margins, strong revenue growth and planned debt reduction are the main reasons brokerages remain positive about its long-term prospects.
However, an approximately 85x FY26 earnings valuation means the stock is far from cheap.
The key question for investors is therefore not simply whether Milky Mist is a good business.
It is whether the company can grow fast enough to justify the premium investors are being asked to pay for that business.
Disclaimer
This article is based on publicly available information and third-party brokerage research and is intended solely for informational and educational purposes. The subscription data, grey market premium, valuation metrics and brokerage views mentioned in the article are subject to change and should not be treated as a recommendation to buy or subscribe to the IPO. Investors should conduct independent research, carefully review the official offer documents and consult a SEBI-registered financial advisor before making investment decisions.
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