Buy LT Foods; target of Rs 600: Motilal Oswal

Motilal Oswal's research report on LT Foods

LT Foods (LTFOODS) reported a strong quarter with revenue growth of 19% in 1QFY26, led by 18% YoY growth in Basmati and Other Specialty Rice (branded business volume up 22% YoY) and 32% YoY growth in Organic Foods. Gross margin expanded 70bp YoY, aided by lower input prices, largely offset by higher other expenses (up 120bp YoY due to increased ad spending). Hence, its EBITDA margin contracted 90bp YoY. Demand remained strong across regions, with volume likely to grow in the lower double-digits for FY26. With basmati prices stabilizing, we expect its margins to improve despite higher brand spending. We broadly retain our EPS estimates for FY26/FY27. We reiterate our BUY rating on the stock with a TP of INR600 (premised on 21x FY27E EPS).

Outlook

We estimate a revenue/EBITDA/adj. PAT CAGR of 16%/23%/28% over FY25-FY27. We reiterate our BUY rating with a TP of INR600 (based on 21x FY27E EPS).