Milky Mist IPO fully subscribed on day two, Temasek-backed dairy firm raises Rs 1,350 crore

IPO sails through on strong demand

The initial public offering of Milky Mist, the Tamil Nadu-based dairy products company backed by Singapore's Temasek, was fully subscribed on the second day of bidding on Wednesday. The Rs 1,350 crore (approximately $163 million) issue saw robust interest from investors across categories, according to data from stock exchanges.

The subscription comes at a time when the Indian consumer staples space is witnessing heightened activity, with several FMCG and food companies tapping the primary market. Milky Mist's offering includes a fresh issue of shares along with an offer for sale by existing shareholders.

Expansion without fresh debt

The company has signalled that it intends to fund its growth plans without taking on additional debt. Milky Mist is looking to strengthen its presence in Tier 1, 2 and 3 cities, a strategy that reflects the broader shift in India's dairy consumption patterns as urbanisation deepens and disposable incomes rise.

Analysts point out that the company's focus on value-added dairy products — such as paneer, curd, and ghee — gives it a margin advantage over commoditised milk sales. The firm has also been pushing its protein-based product range, which is emerging as a key growth engine.

Valuation debate: 85x earnings

The IPO has not been without its share of scepticism. At the upper end of the price band, the stock is being offered at roughly 85 times trailing earnings, a valuation that some market watchers consider rich for a dairy company. Value Research, in a note, asked whether investors should subscribe at such a multiple, given the competitive intensity in the sector.

Rivals such as Mother Dairy, Amul, and regional players hold significant market share, and margin pressure in the dairy business is a recurring theme. Still, Milky Mist's consistent revenue growth and brand recall among South Indian consumers have drawn interest from institutional buyers.

The story behind the brand

Milky Mist's journey is an unusual one. The company was founded by a school dropout at the age of 16, who started with a small dairy operation and built it into a brand with annual revenues crossing Rs 10,000 crore, according to media reports. That entrepreneurial arc has given the IPO a narrative that resonates with retail investors.

The company has diversified beyond traditional dairy into products like cheese, butter, and flavoured milk, while its protein-rich offerings are being positioned as a lifestyle choice for health-conscious consumers. The management has indicated that these newer categories will drive the next phase of growth.

What to watch

The final day of bidding is expected to see further momentum, especially from retail investors. The share allocation and listing date are yet to be announced. Market observers will be watching the grey market premium and the listing performance, which will test whether the 85x earnings valuation holds up in secondary trading.