Modern Dairies Limited

Consumer Defensive — Packaged Foods · BSE

₹50.00−₹1.05 (−2.06%)

DalalBaazaar Score

47 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:59 pm

Understanding the Business

Company site ↗

The 60-second version of Modern Dairies Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Modern Dairies Limited engages in the manufacture and sale of milk products in India. It offers liquid milk, skimmed and whole milk powder, dairy whitener, pure ghee, butter, cheese, casein, WPC, and lactose, as well as nutraceuticals.

IndustryPackaged Foods

SectorConsumer Defensive

Employees419

Annual revenue₹339 Cr

How does it make money?

Turns over ₹339 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹3 left at the operating level before interest, tax and depreciation. Each of its 419 employees supports ₹80.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹80.9 lakh

Who are its competitors?

The closest listed comparisons in its industry are NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD, TATA CONSUMER PRODUCT LTD, DABUR INDIA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 12.3% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE51.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +57% while net margin moved -74% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+57%

Margin effect-74%

DalalBaazaar Score

47/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 8.8% is weak

Quality vs. Valuation

Company Quality

48/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

58/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

24.8x

3Y Median

3.8x

40 monthly readings · mean 6.0x · range 0.8x–29.1x

Sector Median

51.7x

median of 4 sector peers

⚠️Current valuation is approximately 548% above its 3y median of 3.8x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 52% below the peer median of 51.7x.

vs. its own history

Expensive

3.8x median over 40 months · +548%

vs. sector peers

Cheap

51.7x median of 4 peers · -52%

vs. generic bands

Fair

15x–35x

EV/EBITDA

14.5x

PEG

1.06

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 91% over 3 years.
Very low debt
Debt/Equity of 0.21x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

4 items require attention · 1 high · 3 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.0 points, from 8.3% to 3.3%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹6 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 60% over 3 years.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 22% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 91% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 52% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 8.3% to 3.3%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 548% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 12% a year✓ 16.2% CAGR
Latest reported year was 16.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 1%✓ 3.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹6 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 9%✓ 12.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 6 neutral · 1 weak

Market Cap

₹160 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

24.8x

Fair

Fairly valued against the generic band

P/B Ratio

2.67x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹2.02

Profitable

Profitable on a per-share basis

ROE

8.8%

Moderate

Moderate capital efficiency

ROCE

12.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.21x

Low

Conservative leverage

Revenue Growth (YoY)

16.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

23.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹6 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

3.6%

Weak

Thin margins leave little room for error

Net Margin

1.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.11

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.68

Defensive

Steadier than the market

52W Range Position

80%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

50.1 / 41.7

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

56.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹216 Cr	₹360 Cr	₹347 Cr	₹339 Cr	+16.2%
EBITDA	₹18 Cr	₹22 Cr	₹15 Cr	₹11 Cr	-14.8%
EBITDA Margin	8.3%	6.2%	4.3%	3.3%	—
PAT (Net Profit)	₹12 Cr	₹34 Cr	₹83 Cr	₹5 Cr	-26.2%
EPS	₹5.21	₹14.68	₹35.32	₹1.77	-30.2%
ROE	—	—	205.6%	8.8%	—
ROCE	—	—	137.6%	12.3%	—
Total Debt	₹126 Cr	₹71 Cr	₹7 Cr	₹12 Cr	-54.8%
Free Cash Flow	₹12 Cr	₹23 Cr	₹17 Cr	-₹6 Cr	—

🟢 Revenue has grown at 16.2% a year over 3 years.

🔴 EBITDA has shrunk at 14.8% a year over 3 years.

🔴 EBITDA Margin has fallen from 8.3% to 3.3% over 3 years (-5.0 pts).

🔴 PAT (Net Profit) has shrunk at 26.2% a year over 3 years.

🔴 EPS has shrunk at 30.2% a year over 3 years.

🔴 ROE has fallen from 205.6% to 8.8% over 3 years (-196.7 pts).

🔴 ROCE has fallen from 137.6% to 12.3% over 3 years (-125.3 pts).

🟢 Total Debt has shrunk at 54.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹12 Cr to -₹6 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹132 Cr

Total Liabilities

₹76 Cr

Cash & Equivalents

₹10 Cr

Operating Cash Flow

-₹5 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

65.8%

Peer Comparison

Company	P/E	ROE
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%
TATA CONSUMER PRODUCT LTD	59.3x	7.5%
DABUR INDIA LTD	34.7x	17.2%

Recent News

6 general

Modern Dairies Upper Circuit Today: Price, Data and Peers

Univest, 13 Oct

Modern Dairies Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 02 Sept

Modern Dairies secures BSE listing approval for 35 lakh promoter shares

scanx.trade, 13 Oct

Modern Dairies Ltd. (MODAIRY) 52 Week High Streak: Second Straight Session Near Peak

Univest, 07 Oct

Modern Dairies Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Modern Dairies shareholders approve all AGM resolutions with near-unanimous votes

scanx.trade, 26 Sept

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health

MiddlingGrowth · Valuation

WeakBusiness Quality · Profitability · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑