Summary
LT Foods Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026 12:00 PM
Event Participants
Executives 4 Ashwani Kumar Arora (MD & CEO), Monika Chawla Jaggia (Chief Corporate Development Officer), Rohan Grover (CEO – Nature Bio Foods), Sachin Gupta (CFO)
Analysts 11 Abhishek Jaiswal (Individual), Abhishek Maheshwari (Skyridge Fund Managers), Abhishek Mathur (Systematix), Aman Goval (Individual), Amit Doshi (Care Portfolio Managers), Ankur Arora (Magma Ventures), Chirag Singhal (First Water Fund), Damodaran (Acuitas Capital), Harsh Shah (Bandhan AMC), Pradyumna Choudhary (JM Financial), Pranav Bhootra (Anand Rathi)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Q3 FY26) | ₹2,812 crores | +23% YoY; Normalized growth of 8% excluding U.S. tariffs and Golden Star acquisition. |
| Revenue (9M FY26) | ₹8,085 crores | +24% YoY; Normalized growth of 12% driven by brand equity and market penetration. |
| EBITDA (Q3 FY26) | ₹317 crores | +20% YoY; Sustained growth despite high input costs and geopolitical disruptions. |
| EBITDA Margin (9M) | 11.6% | -30 bps YoY; Impacted by increased brand investments and digitization initiatives. |
| PAT Margin (9M) | 5.6% | -79 bps YoY; Pressure due to geopolitical disruptions and higher interest/depreciation. |
| Net Debt | ₹1,180 crores | Slight decrease YoY; Excluding ₹260 crores frozen in insurance claim FDR. |
| Interest Cost | Not Specified | +46% YoY; Driven by higher working capital utilization and U.K. warehouse lease accounting. |
| Basmati Market Share (India) | 23.5% | Down from ~30% YoY; Focus shifted to premium segments over low-price volume. |
Geographic & Segment Commentary
- North America: Comprises 46% of revenue; flagship brand ‘Royal’ holds 60% Basmati market share while Golden Star is the #1 Jasmine brand. Normalized growth stood at 12% excluding tariffs, though January saw a slight consumption slowdown due to price hikes.
- India: Contributes 29% of revenue with 10% YoY growth. Household reach for ‘Daawat’ expanded to 58.11 lakh homes in Sept 2025 (up from 45.56 lakh in March 2023), reflecting strong brand stickiness.
- Europe & U.K.: Comprises 16% of revenue with 35% YoY growth. Growth was primarily driven by the new U.K. facility becoming operational, with a long-term target to reach GBP 100 million in U.K. revenue.
- Basmati & Specialty Rice: Contributes 88% of consolidated revenue; grew 26% YoY (12% normalized). Segment growth is supported by sustained marketing and deeply entrenched global distribution.
- Organic Segment: Delivered 15% YoY growth in 9M FY26. Management notes current quarterly fluctuations are seasonal and expects momentum to continue as new European capacities ramp up.
- Ready-to-Heat (RTH) / Ready-to-Cook (RTC): Experienced a 4% YoY degrowth in 9M FY26. Management is investing in a new 15-million pouch capacity in the U.S. to reach a ₹400 crore breakeven threshold within 3 years.
Company-Specific & Strategic Commentary
- U.S. Tariff Impact: Management has passed on the majority of the 50% import tariff to consumers, resulting in a ~25% retail price increase. The tariff is levied on the imported value (COGS) from India, not the final U.S. sales price.
- Paddy Procurement: Basmati production for Crop 2025 is lower than early estimates due to weather-related yield moderation. Average procurement prices have increased by 7-8% YoY, and the company has covered ~80% of its requirements.
- Regional Rice Foray: Focusing strictly on the premium end of regional rice (non-basmati) to maintain margins; currently generates ~₹200 crores in India with a new packing unit starting in Feb 2026.
- Middle East Expansion: Strengthening Saudi Arabia operations with an on-ground team and the ‘Hadeel’ brand for HoReCa; branded revenue in Saudi doubled to ₹35 crores in 9M FY26.
- M&A Update: The proposed acquisition of Global Green Group in Hungary was rejected by the Hungarian Ministry of National Economy citing national and sectoral risks.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Double-digit growth | Target remains intact for FY26 based on brand strength and geographic reach. |
| ROCE | 23% Target | Long-term goal to move from current ~20% range to 23% through efficiency. |
| RTH Breakeven | FY 2028-29 | EBITDA breakeven expected once segment revenue crosses ₹400 crores. |
| U.K. Revenue | GBP 100 million | 5-year target for the U.K. specific business (currently at GBP 45 million). |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical / Tariffs | U.S. tariffs remain at 50%; while passed on, they pose a risk of demand destruction or “lock-in” losses if suddenly reversed. |
| Yield Moderation | Lower-than-expected Basmati yields in 2025 have driven up paddy prices by ~8%, putting pressure on gross margins. |
| Regulatory | U.S. CVD determination on Ecopure Specialties delayed to Feb 17, 2026; Hungarian acquisition recently blocked by the government. |
Q&A Highlights
U.S. Tariff Dynamics
- Question: How much of the 50% tariff has been passed to the end customer? (Pradyumna Choudhary)
- Answer: Most has been passed on, resulting in a ~25% retail price hike. While January saw a slight slowdown, Q4 will provide a clearer trend on consumption elasticity (Ashwani Arora).
- Question: Is the tariff on the sales value or import value? (Amit Doshi)
- Answer: It is on the imported value (COGS) in the U.S., effectively translating to a 25-26% impact on the final sales value (Sachin Gupta).
Input Costs & Inventory
- Question: What is the trend in paddy prices due to lower yields? (Amit Doshi)
- Answer: Average stock value is up ~4.5% as of Dec; full-year procurement prices are expected to be 7-8% higher YoY (Sachin Gupta).
- Question: Do we have enough inventory to hedge against price rises? (Meet Jain)
- Answer: The company follows a policy of covering 80% of its annual requirements and is currently in the middle of heavy seasonal buying (Ashwani Arora).
Segment & Regional Strategy
- Question: Why did the Middle East revenue drop 11%? (Abhishek Jaiswal)
- Answer: The company intentionally exited certain non-strategic, low-margin private label businesses; branded revenue actually increased (Sachin Gupta).
- Question: What is the potential of the new Regional Rice facility? (Amit Doshi)
- Answer: It is a packing unit designed to support growth; it can contribute an additional ₹200 crores in revenue over the next 2 years (Ashwani Arora).
Key Takeaway
LT Foods delivered record 9-month revenue of ₹8,085 crores, representing a 24% YoY increase (12% normalized), fueled by strong brand equity in its ‘Royal’ and ‘Daawat’ labels. Despite significant geopolitical headwinds—specifically the 50% U.S. import tariff and high Basmati paddy prices due to yield moderation—the company successfully passed on most costs, maintaining a steady EBITDA growth of 20%. Strategic focus remains on premiumization, with a notable shift away from low-margin private labels in the Middle East and a disciplined foray into premium regional rice. While PAT margins faced temporary compression to 5.6% due to higher interest and lease costs, management remains confident in achieving double-digit revenue growth and improving ROCE to 23%. The company is well-positioned for the long term, provided it can navigate the current consumption elasticity risks in the U.S. and successfully ramp up its new RTH and European capacities.
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