The pandemic has slowed the growth of the dairy industry in India
We remind that shares of dairy companies in India during the coronavirus pandemic have jumped by about 90% since March 24, when Prime Minister Narendra Modi imposed a ban on leaving the house for the vast majority of citizens, suspended public transport in the country and stopped selling almost all goods, except food and some other vital goods.
"Dairy consumption is increasing in households because restaurants and markets are closed and people cook a lot at home", says the message of Economictimes.
According to CRISIL, an analytical company based in India, sales of value-added dairy products have fallen significantly in the country. Over the past decade, India's dairy industry has grown at an average annual rate of 10%.
Sales of value-added products, including ice cream, cottage cheese, yogurt, and flavored milk, are expected to decrease by 2-3%. This will reduce the operating profitability of market companies by 50-75 basis points.
Excess milk is stored in stocks in the form of skimmed milk powder, together with a drop in sales of value-added products, this increases the need for working capital in factories. At the same time, the impact of the two-month lockdown remains (in India, there is a strict quarantine due to COVID-19), due to the closure of restaurants and hotels that consumed 20% of the products of the organized dairy sector.
Stable sales of liquid white milk will prevent a stronger drop in revenue for dairy companies, analysts believe. The market is expected to recover by 2022.