Captains Speak     

Published: March 31, 2024
Updated: March 31, 2024

LT Foods

Daawat rice marketshare jumps to 30%

Thanks to its working towards solidifying the company’s core business and fortifying its product portfolio, increasing consumer engagements through targeted marketing campaigns for new consumer acquisition, and increasing penetration in newer geographies as well as adding economic of scale, LT Foods has succeeded in pushing up the marketshare of its ‘Daawat’ brand in India to an impressive 30.1 per cent (MAT December 23, 2023, AC Nielsen retail survey audit). At the same time, during Q3FY2024, in the US the company outperformed the growth of the segment with its Basmati brand ‘Royal’ experiencing a growth of 14.8 per cent, its Jasmine rice brand ‘Golden Star’, seeing a substantial increase of 23.3 per cent and the ‘Royal RTH’ segment witnessing a notable rise of 33.3 per cent yoy.

NEW PRODUCTS

Recently, it launched products like Biryani mix, Cuppa Rice, etc, to expand its product offerings in India. Convenience products contribute revenue of Rs 250 crore (largely from the US) with an EBITDA loss of Rs 12 crore. The company expects to achieve EBITDA breakeven with a turnover of Rs 350 crore. In the next 4-5 years, the expected turnover will be Rs 800 crore with an EBITDA margin of 12-13%. On a sustainable basis, revenue can grow at 12% CAGR (8% volume and 4% pricing/mix) with a mid-teen EBITDA margin.

Analysing the performance of the company during Q3 FY2024, Mr Arora revealed that for the quarter ended December 2023, total revenue stood at Rs 1,950 crore, up 9% yoy. EBITDA stood at Rs 246 crore, up 38% yoy. PAT stood at Rs 153 crore, up 52% yoy. Cash profit stood at Rs 189 crore, up 42% yoy. Basmati and Other Speciality Rice recorded an 18% yoy growth, while the Ready-to-Eat (RTE) and Ready-to-Cook (RTC) business experienced a 13% growth. Revenue in the RTE and RTC segment, comprising Daawat Sehat on the Health platform and Royal RTH (in the US), Cuppa Rice, Daawat Sauté Sauces and Kari Kari (Japanese Rice Snacks) for 9MFY24 increased by 13% yoy to Rs 143 crore in 9MFY24. The company saw an impressive margin expansion. EBITDA increased by 36% on a yoy basis to Rs 726 crore and the EBITDA margin increased 227 bps to 12.7% in 9MFY24. PAT increased by 54% on a yoy basis to Rs 447 crore and the PAT margin increased by 215 bps to 7.8% in 9MFY24. Consequently, the marketshare of its ‘Daawat’ brand in India stands at an impressive 30.1% (MAT December 23; AC Nielsen Retail Survey Audit).

U.S. RICE CRAZE

Other points made by Mr Arora:

• The Daawat brand has a 30% marketshare in India and the Royal brand has a 50% marketshare in the US. The company has the 2nd biggest brand in the US in Jasmine rice under the brand name Golden Star.
• The size of Jasmine rice is 10 times the size of Basmati rice in the US.
• The working capital requirement is high for the company as Basmati rice requires ageing of two years.
• The company buys rice from mandis during the harvest time of Oct-Jan every year.
• The current debt is around Rs 7 bn, largely for working capital requirements.