Market is overlooking dairy stocks. That spells opportunity

Summary: Milk touches every Indian household daily, yet the companies behind it trade at valuations far below FMCG giants. However, rising value-added products and entrenched distribution give dairy stocks a growth edge that makes them worth a second look. Find the hidden opportunity in India’s dairy story below. Every morning, hundreds of millions of Indians begin their day with milk. It’s poured into tea, ladled into breakfast porridge, offered in temples or whisked into a child’s glass of Bournvita. Milk, in India, is not an optional indulgence. It is culture. And yet, enter the stock market and you’ll see an odd paradox. Where shares of FMCG giants like Hindustan Unilever, Dabur and Britannia trade at eye-watering valuations of up to 50 times earnings, dairy companies, which sell the one product Indians consume every single day, whose networks run into the remotest villages and who deliver high returns on equity, still trade at half those multiples. Part of the reason is that milk remains a low-margin product category and the industry is highly fragmented. However, there are tailwinds at work that make the industry worth a second look. We look at them below: 1) The big unlock: Value-added dairy products The next growth frontier for the industry is not milk but other value-added products like cheese, curd, yogurt, whey protein, ice cream, etc. Globally, 75 per cent of dairy revenues come from value-added products. In India, it’s only about half. This gap presents a huge opportunity. The market for these products is nascent and growing at an impressive pace of 10 to 15 per cent per annum (as per Milky Mist’s IPO draft papers),

This article was originally published on August 28, 2025.