A story that dives into the Mily Mist IPO.

In today’s Finshots, we break down the Milky Mist IPO, which opens for subscription today and closes on August 13th.<br>But before we begin, if you love keeping up with the buzz in business and finance, make sure to subscribe and join the Finshots club, loved by over 5 lakh readers.<br>Already a subscriber or reading this on the app? You’re all set. Go ahead and enjoy the story!<br>The Story<br>When you think of Milky Mist, what comes to mind?<br>Probably paneer, curd, Greek yogurt and all kinds of other dairy products. Everything except fresh packets of milk that you’d typically get from giants like Amul or Nandini.<br>But a dairy company that doesn’t sell the very milk that goes into making these products sounds a little strange, right?<br>Well, there’s a story behind it.<br>In 1985, before Milky Mist officially kicked off, the company’s founder, Chairman and Managing Director T Sathish Kumar’s family was already in the milk trading business. Kumar, who came from an agricultural background, joined the business but soon realised that milk supply was highly unorganised.<br>So he decided to try something different: making paneer, which was seeing growing demand at the time.<br>More than three decades later, Milky Mist has stuck to that basic philosophy, just with a dash of diversification. It sells value-added dairy products such as cheese, paneer, butter, curd, ghee, yogurt and ice cream, along with frozen, ready-to-eat and ready-to-cook products.<br>And there’s a good reason for this. Fresh milk is a low-margin commodity, with margins typically around 5-8%. Value-added products, on the other hand, can offer margins upwards of 8% and even reach 40% for products like ice cream.<br>Then there’s the logistics problem. Fresh milk has a short shelf life and needs a cold chain, making it expensive to transport over long distances. That’s why companies like Amul work with local farmers and regional cooperative unions across India, while regional players like Nandini largely stay within their home markets.<br>But since Milky Mist’s value-added products last much longer, they can be made at one location and shipped across the country. For context, the company sources milk from more than 74,600 farmers across Tamil Nadu, Andhra Pradesh and Karnataka, all within a 400-kilometre radius of its single large manufacturing plant in Perundurai, near Coimbatore. From there, it sends its products across 22 states and 5 Union Territories.<br>There’s another advantage too. Milk supply fluctuates between a “flush season”, when production is abundant, and a lean season, when it falls. Fresh-milk businesses have to deal with this mismatch because milk can’t be stored for long. Milky Mist, however, can turn surplus milk during the flush season into products with longer shelf lives, effectively storing that excess milk as inventory.<br>So perhaps it’s better to think of Milky Mist as a packaged food company built around dairy.<br>And this strategy seems to have worked. The company generated ₹3,138 crore in revenue in FY26, with nearly 60% coming from paneer, cheese and curd. The rest came from products like ice cream, ghee, butter and yogurt. Revenue has grown at over 30% CAGR in recent years, while operating margins have stayed around 12-14%.<br>But now, Milky Mist wants to take the next step. It wants to raise money from the public through an IPO, which is expected to raise ₹1,553 crore. About 92% of this will come from a fresh issue. Most of the money will go towards repaying its outstanding debt and expanding or modernising its Perundurai plant. The rest will be used to deploy freezers and coolers and for general corporate purposes.<br>And that brings us to the real question. Is this a good business at the price investors are being asked to pay?<br>Let’s start with the sweet side. For starters, Milky Mist has managed to build a meaningful position in categories that are generally more profitable than plain milk. It calls itself the fastest-growing packaged food company among peers with revenues of ₹1,500 crore or more. It is also the largest private packaged paneer brand in the organised market, with roughly 19% market share by value.<br>It has a strong presence in South India too, with around 12% of the organised cheese market by value in the region, making it the third-largest private player nationally.<br>Another advantage is how it sources its raw material. Milky Mist buys milk directly from farmers, without middlemen. That helps it build stronger relationships with its suppliers while also ensuring that farmers receive their payments within 7-10 days.<br>Then there’s distribution. The company sells through retail stores, supermarkets, HoReCa (Hotels, Restaurants and Cafes), its own platform, e-commerce, quick commerce and exclusive Milky Mist parlours. And just so you get a clearer picture, about 86% of its revenue comes from offline channels and the rest from online channels.<br>So far, so good. But there’s another side to the business, and it’s...