LT Foods Q3 Result and Concall Highlights: Growth, Challenges, and Future Outlook

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LT Foods Result and Concall: Key Takeaways and Insights

LT Foods Result and Concall: Key Takeaways and Insights

Financial Performance Highlights

LT Foods Q3 Result:

LT Foods Q3 FY25 Performance

Revenue Growth: LT Foods reported a 17% rise in consolidated revenue, reaching INR 2,288 crores compared to INR 1,950 crores in the previous year.
Gross Profit: Increased by 22%, with margins improving by 125 basis points (bps) to 33.9% due to favorable input costs.
EBITDA: Grew by 7% year-on-year, standing at INR 263 crores with an EBITDA margin of 11.5%.
Profit Before Tax (PBT): Increased by 3% to INR 217 crores.
Profit After Tax (PAT): Declined by 4.7% to INR 145 crores. The earnings per share (EPS) decreased by 5% to INR 4.13.
Cash Profit: Increased marginally by 1% to INR 196 crores.

9-Month Performance (April to December)

Revenue: Up by 14%, reaching INR 6,510 crores.
Gross Profit: Stood at INR 2,202 crores, with margins improving by 145 bps to 33.8%.
EBITDA: Rose by 7% to INR 777 crores, though the EBITDA margin declined by 80 bps to 11.9%.
PAT: Increased by 1% to INR 451 crores.
EPS: Remained steady at INR 12.81.
Cash Profit: Grew by 5% to INR 584 crores.

LT Foods Q3 Operational Updates

Freight Costs

Logistics costs as a share of revenue increased by 2.3% year-on-year and 0.5% quarter-on-quarter, now standing at 7.1%.
Management expects freight rates to normalize, likely benefiting FY26 financials.

Associate Earnings

Golden Star’s earnings saw a sharp drop due to higher freight expenses. Profits plunged from INR 117 million last year to just INR 4 crores this quarter.

Strategic Moves

Subsidiary Acquisition

LT Foods acquired an additional 4% stake in Raghunath Agro Industries, making it a fully owned subsidiary. Plans for merging the entity are underway.

Pricing Strategy

With a decline in Basmati prices, the company is evaluating price adjustments to maintain market competitiveness.

Capital Expenditure and Growth Outlook

Capex Plans

For FY25, LT Foods expects capital expenditure (Capex) to be between INR 150-200 crores, with INR 164 crores already spent in the first nine months.
The U.K. facility is operational, and the U.S. facility is expected to be ready by May next year.

Growth Projections

Management forecasts 12% revenue growth for FY26, maintaining similar growth for Q4 FY25.
Organic food sales are projected to grow by 10% next year, with the organic segment targeting EBITDA margins above 14% once revenues hit INR 1,000 crores.

Market Trends and Dynamics

LT Foods holds a 28% share in the Basmati rice market, down from 30% last year. This decline is attributed to the decision to exit unprofitable segments.
Domestic demand for specialty and Basmati rice remains sluggish, but international markets continue to show strong double-digit growth.

LT Foods Q3 Challenges and Headwinds

Freight and Input Costs

Elevated freight expenses have significantly impacted margins and profitability.
Passing on these increased costs to consumers remains challenging due to market competition.

Profitability Focus

Despite rising costs and competitive pressure, the company is determined to improve margins. Management is optimistic that stable input costs will help enhance profitability in FY26.

LT Foods is navigating a challenging environment with rising freight expenses and competitive pricing dynamics. However, the company’s strategic decisions, international market growth, and investments in organic food offerings position it for future success. The management remains hopeful about better margins and profitability improvements in the coming years.

FAQs

1. What were the key highlights of LT Foods’ Q3 FY25 results?
LT Foods reported a 17% increase in consolidated revenue, reaching INR 2,288 crores. Gross profit grew by 22%, and EBITDA rose by 7% to INR 263 crores.

2. How has the company performed in the first nine months of FY25?
Revenue rose by 14% to INR 6,510 crores, while PAT increased by 1% to INR 451 crores. Cash profit grew by 5%.

3. What are the future growth projections for LT Foods?
The management expects 12% revenue growth for FY26 and continued growth in the organic food segment, targeting EBITDA margins above 14%.

4. What challenges is the company facing?
Higher freight costs and competitive pricing pressures have impacted margins. However, management anticipates better profitability as input costs stabilize.

5. What steps has LT Foods taken to strengthen its operations?
The company acquired full ownership of Raghunath Agro Industries and plans to merge it. Additionally, new facilities in the U.K. and U.S. are part of its growth strategy.

By focusing on strategic market moves and operational efficiency, LT Foods aims to tackle current challenges while positioning itself for future growth and profitability.