Indian milk processing firm Hatsun Agro Product  said on Wednesday its quarterly profit surged 54% as a rise in input costs was offset by higher milk prices on the back of strong demand.

Milk prices in India hit its peak during the June quarter on account of lower output and robust demand, while the coinciding summer season with the quarter increased demand for ice-creams and curds.

The company, which sells products under brands like Arun Ice Cream and Arokya Milk, said its profit after tax rose to 801.6 million rupees ($9.8 million) for the quarter ended June 30, from 519.5 million rupees a year earlier.

Its revenue also rose nearly 7% year-on-year to 21.51 billion rupees.

However, the Chennai-based company said its raw material costs rose nearly 12% to 15.14 billion rupees, accounting for nearly three-fourths of the total expenses.

To protect margins, dairy companies in India kept the prices of their products unchanged even when there was a fall in procurement prices.

Analysts at ICICI Securities on the dairy sector said cattle feed prices also stabilised during the quarter.

The company procures milk from most of the southern states — including Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, besides the western state of Maharashtra — a region which according to analysts has seen a decline in milk inflation through the first half of the year.

Analysts added they expect milk procurement prices to further slide in the coming quarters due to the monsoon season and commencement of the flush season.

Hatsun Agro Product declared an interim dividend of six rupees per share, while its stock closed 0.65% up ahead of the results.

($1 = 82.0691 Indian rupees)

Source : Reuters : July 29th 2023 Reporting by Ashish Chandra in Bengaluru; Editing by Sohini Goswami