Buy LT Foods; target of Rs 378: Geojit Financial Services

Geojit Financial Services research report on LT Foods

LT Foods Ltd. (LTF) is a global consumer specialty company with an explicit focus on basmati rice, organic foods and ready to eat/ready to cook (RTE/RTC) products. LTF is having a presence in more than 80 countries with significant regional exposure in the US, Europe, Middle East etc. We upgrade to BUY rating with a revised target price of Rs.378 ( Rs. 230) considering the continued performance and recent expansion and regional diversification initiatives. Revenue grew by 17%YoY in Q1FY25, aided by 14%/34%/37% YoY, respectively, for Basmati rice segment (87% mix)/organic segment (10% mix)/ RTE/RTC segment (3% mix). Gross and EBITDA margins declined by 40bps YoY respectively due to higher input costs and freight charges. LTF expects higher freight costs due to disruption in the red sea to be limited to the next two quarters, and the expected decline in input costs with healthy growth in new crops will support margins. As part of regional diversification strategy, LTF has set up a new manufacturing facility in the UK (USD1bn market) and has appointed a distributer for Saudi Arabia market (largest basmati rice market in the world) which is long-term positive for the company. Expect earnings to grow at a 13% CAGR over FY24E-26E. LTF currently trades at 1Yr Fwd P/E of 17x, we value at 16x Sept 2026 EPS.

Outlook

LTF’s recent initiatives towards expansion & diversification strategy support a strong positive outlook and re-rating. LTF currently trades at 17x 1Yr Fwd P/E. We value LTF at 16x FY25E EPS and arrive at a target price of Rs. 378, and upgrade to BUY.