Milk procurement prices continue to remain high due to (1) steep increase in RM prices, (2) higher SMP prices and (3) muted flush season. We note delayed price hikes had impacted margins in H1FY23 and similar story continues in H2FY23. Heritage is likely to report lowest EBITDA margin of 4.5% in FY23 in past eight years in our view. We model the margins to recover only in FY24.