Heritage’s real game-changer wasn’t just milking more cows—it was when they started churning out Nestlé’s curd on contract. If history’s any guide, Act Two could look a lot like Act One, only this time the spotlight’s on Greek yogurt and ice cream rolling off their lines for other brands.
Heritage Foods: The Real Story Isn’t Just About Milk
Let’s get the basics out of the way. Heritage Foods had a cracker of a year. Revenue up 9%, profits up 77%. Curd, paneer, ghee—all flying off the shelves. The milk business? Still the backbone, but honestly, it’s not the star of the show anymore.
The Numbers Game
Here’s what the management (and the market) is gunning for: ₹6,000 crore in sales by FY28, with Value-Added Products (VAP) like curd, paneer, and ghee making up ₹2,400 crore. That’s a 60:40 split between dairy (milk) and VAP. Ambitious? Sure. Necessary? Maybe not.
Let’s look at what’s actually working:
- VAP is growing at 19% a year. At this pace, ₹2,400 crore is a pit stop, not the finish line.
- Milk procurement is up 10%, but the real juice is in what you do with that milk, not just selling it as is.
- Gross margins are up 425 bps—that’s not happening because of plain vanilla milk.
| Metric | FY25 Actual | 2028 Target | CAGR Required | Current Growth Rate |
|---|---|---|---|---|
| Total Revenue | ₹4,135 Cr | ₹6,000 Cr | 13.2% | 9% |
| VAP Revenue | ₹1,679 Cr | ₹2,400 Cr | 12.6% | 19.3% |
| Dairy Revenue | ₹2,456 Cr | ₹3,600 Cr | 13.6% | ~8.1% |
This table gives a clear snapshot of where Heritage stands and what’s needed to hit those 2028 targets, with both VAP and dairy revenue side by side for easy comparison.
The 50:50 Sweet Spot
Here’s the kicker: If Heritage just chills a bit and settles for a ₹5,000–5,200 crore turnover with a 50:50 split between milk and VAP, everyone’s happier. Why?
- ROCE goes through the roof. More VAP means fatter margins. Investors love that.
- Valuation multiples jump. The market pays more for brands with a bigger VAP pie (think Vadilal, Milky Mist etc).
- Business gets less commoditized. Milk is a volume game; VAP is a value game. Guess which one the market likes more.
| Scenario | Revenue Mix (Milk:VAP) | Total Revenue | VAP Revenue | ROCE Estimate | Valuation Multiple (PE) |
| Aggressive Growth | 60:40 | ₹6,000 Cr | ₹2,400 Cr | 22–25% | 30–35x |
| Quality Growth | 50:50 | ₹5,000–5,200 Cr | ₹2,500–2,600 Cr | 25–30% | 35–40x |
Milk: The Unsung Supply Chain Hero
Now, let’s not diss the milk business. It’s the supply chain anchor. Heritage has a direct line to 3 lakh farmers, 1.72 million liters a day, and a procurement cost that’s actually come down. When new FMCG players want to jump into dairy, they’ll find Heritage already has the keys to the milk kingdom.
And Heritage isn’t new to contract manufacturing. They’ve made stuff for Nestlé, and when all these 100% VAP brands (Milky Mist types) hit the stock market and get desperate for topline, Heritage can rent out its capacity—ice cream, curd, paneer, you name it—on a cost-plus model. That’s free money with no brand risk.
The Real Use of Dairy
After a point, selling more milk is like adding more extras in a movie—nice for the crowd, but nobody remembers them. The real value is in the supply chain. Milk keeps the factories running, ensures you never run out of raw material for VAP, and gives you bargaining power when the next D2C dairy brand wants to scale up.
What I HOPE Heritage will Do?
- Don’t chase ₹6,000 crore just for the headline.
- Focus on a 50:50 mix at ₹5,000–5,200 crore. Fatter margins, better ROCE, higher multiples.
- Use the milk business as a moat, not a growth engine. Let the VAP brands fight for shelf space—Heritage can quietly make money supplying them, too.
To wrap it up: Milk is like a Bollywood heroine’s mom on set. Everyone thinks she’s a pain, but without her, the star never gets to shine. Heritage’s milk business is that mom—keeping the show running so VAP can take the spotlight.
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