Buy LT Foods; target of Rs 460: Motilal Oswal

Motilal Oswal's research report on LT Foods

The global rice trade has experienced a sharp uptick, driven by rising consumption, policy shifts, and record production. With global rice consumption projected to reach 530mMT in FY25, up from 522mMT in FY24, demand remains robust across key markets. India, the world’s largest rice exporter, has capitalized on this trend, with rice exports surging 21% YoY in 9MFY25. This was fueled by the removal of export restrictions and a strong global appetite for Indian basmati and non-basmati rice: India’s rice reserves soared to 44.1mMT in Dec’24, far exceeding the government’s target of 7.6mMT. Record production has led to a 20% drop in basmati paddy prices this season, easing inflationary concerns but pressuring margins as inventory costs remained elevated.

Outlook

We expect LTFOODS to report a revenue/EBITDA/PAT CAGR of 14%/19%/25% over FY25E-27E. We value the stock at 17x FY27E EPS to arrive at our TP of INR460; reiterate BUY.