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Published: Apr 15, 2023
Updated: Apr 15, 2023
LT Foods is one of the most renowned Basmati rice players not only in India but also in the US and EU markets. The company has also invested in setting up a rice processing facility in Rotterdam in Europe and a packaging unit in the US. It has a dominant marketshare of 50%+ in the US while in the Indian market it holds a 27% share.
As per recent studies and research, the global Basmati rice market size was valued at $ 3,318.04 million in 2022 and is expected to expand at a CAGR of 17.72% during 2022-28, reaching $ 8,830.56 million by 2028.
DAAWAT has already established a brand that resembles Basmati rice in the consumer’s mind and the brand has expanded to 65 countries.
Recently, on February 15, 2023, CCI approved SALIC International’s stake purchase in LT Foods. SALIC International Investment Corp is owned and controlled by Saudi Agricultural and Livestock Investment Company.
With the rising demand for rice at home as well as abroad, the company has made rapid strides on the financial front. During the last 12 years, its sales turnover has expanded by over four times – from Rs 1,258 crore in fiscal 2011 to Rs 5,427 crore in fiscal 2022, with operating profit surging over five times from Rs 114 crore to Rs 592 crore and the profit at net level skyrocketing over 12 times from Rs 25 crore to Rs 309 crore.
The company is doing very well in the current year also, if the Q3FY2023 performance is any indication.
The company’s revenues grew to Rs 1,778.47 crore in the December 2022 quarter, up 29.98% from Rs 1,368.22 crore in the corresponding quarter a year ago, aided by price and volume growth. The main segment, Basmati and speciality rice (82% of total revenue), grew by 29% yoy.
The quarterly net profit at Rs 95.27 crore in the December 2022 quarter indicates a 33.4% spurt from Rs 71.42 crore in December 2021.
EBITDA stands at Rs 179.18 crore in the December 2022 quarter, showing a rise of 18.73% from Rs 150.91 crore in the same quarter a year ago.
LTF’s India marketshare has improved to 29.4% (28.5% QoQ), and retail outlets have increased to 1.78 lakhs (1.76 lakh QoQ), which will support future growth. We expect earnings to grow at a minimum 17.5% CAGR over FY22-25E.
On an equity capital of Rs 31 crore, revenues have increased from Rs 3,613 crore in 2018 to Rs 5,400 crore+ in 2022, reserves of more than Rs 1,700 crore, debt:equity of 0.53, ROCE of more than 19% in the last 2 years. With Saudi investments coming into the company, with robust recent quarter results, and with the brand value the company has built over the years, DAAWAT is taking one step forward to be a leader in international markets with a new growth trajectory.
If we look at the technical charts, the stock has made a Cup-and-Handle formation breakout, and now the price coming to touch the long-term trend line indicates that the stock price may appreciate from here on, and we can see the targets of 180-200 for the next 2 years.
In the long term, the stock may achieve targets of 230-250. Invest.
February 15, 2025 - First Issue
Industry Review
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February 01-15, 2025
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