L T Foods — Q1 FY26 earnings call

Call held 28 Jul 2025

Management summary

LT Foods delivered its highest ever quarterly revenue and EBITDA in Q1 FY26, driven by strong growth across key segments and geographies. Strategic brand investments and acquisitions contributed to market share gains, though impacting EBITDA margins slightly. The company is actively managing its product portfolio and pursuing growth in high-potential markets, while addressing specific challenges like litigation and product mix effects on margins.

Highlights

  • Revenue of ₹2,501 crores, up 20% YoY, marking the highest ever quarterly revenue.

  • EBITDA of ₹302 crores, up 17% YoY, also a quarterly high.

  • Organic business reported a remarkable 32% growth, with normalized growth of 18% excluding soya meal.

  • North America revenue increased by 32% YoY (18% normalized), and European Continental revenue grew 57% YoY (24% normalized).

  • Kari Kari snacking segment grew 40% YoY, and Daawat's household reach expanded from 45.56 lakh homes to 56.2 lakh homes.

Concerns

  • EBITDA margin dipped 30 bps to 12.1% in Q1FY26 from 12.4% in Q1FY25, primarily due to increased brand investments.

  • Gross margin deteriorated by 200 bps QoQ, attributed to a product mix shift within the organic segment, specifically lower GP soya meal exports.

  • Middle East revenue saw a 33% degrowth YoY due to the strategic discontinuation of non-strategic private label business.

  • RTH/RTC segment revenue degrew due to the discontinuation of Daawat Sehat (fortified rice) which did not gain consumer traction.

Key financials

  1. Revenue ₹2,501 Cr +20%YoY
  2. EBITDA ₹302 Cr +17%YoY
  3. EBITDA Margin 12.1%
  4. SG&A % Revenue Increase 0.012 decimal fraction
  5. Brand Spend % Revenue Increase 0.012 decimal fraction
  6. Basmati & Specialty Segment Revenue ₹2,124 Cr

What they filed

Q1 FY27: revenue up 11.5%, net profit up 89.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,016 1,044 971 1,051 1,017 +0%1,063 +2%910 −6%1,172 +12%
EBITDA53 64 61 55 60 +13%101 +58%75 +23%116 +111%
Net profit61 62 38 37 71 +16%66 +6%69 +82%70 +89%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Basmati and Other Specialty Rice
    18% Growth
  • Organic Business
    32% Growth18% Normalized Growth (ex-soya meal)
  • Snacking (Kari Kari)
    40% Growth
  • North America
    0.43 % of total Revenue Contribution32% Growth18% Normalized Growth (ex-Golden Star)
  • European Continental
    0.18 % of total Revenue Contribution57% Growth24% Normalized Growth (ex-UK plant)
  • India
    0.31 % of total Revenue Contribution10% Growth13% Volume Growth-2% Realization Decline
  • Middle East and rest of the world
    0.08 % of total Revenue Contribution-33% Degrowth

Capital allocation

high confidence
  • M&A Golden Star (remaining 45% stake) Acquisition · Closed

    To lead as the #1 Jasmine rice brand in the U.S.

    We have also acquired rest of 45% of the Golden Star, which we have completed in May 2025. We now proudly lead as the #1 Jasmine rice brand in the U.S.
  • M&A Leev (additional 21% stake) Acquisition · In process

    Leverage new B2C plant, value accretive, currently hold 30% stake.

    So currently, we have a 30% stake in Leev, and we have an option to buy a further 21%. So with the new plant of B2C, can we expect this to happen soon to leverage this segment? ... So we are in process to acquire.

Guidance & targets

Margin

  • EBITDA Margin Margin · High confidence 12.5% to 13%
    we are expecting as guidance is given, 12.5% to 13% EBITDA margin.

    — Ashwani Kumar Arora

Profitability

  • ROCE Profitability · High confidence 21% plus
    So we are quite confident on the ROCE part to deliver a robust ROCE of 21% plus, which we had delivered in this quarter as well.

    — Sachin Gupta

  • PAT Growth CAGR Profitability · High confidence 21%
    the PAT will grow at a CAGR of 21%.

    — Sachin Gupta

  • EBITDA Growth CAGR Profitability · High confidence 16%
    the EBITDA will grow at a CAGR of 16%.

    — Sachin Gupta

  • ROCE (future) Profitability · going forward year · High confidence 23% plus
    the ROCE that we project to have a 23% plus in a going forward year.

    — Sachin Gupta

Ad Spend

  • Brand Spend as % of Revenue Ad Spend · High confidence 3% to 4%
    But on an average, 3% to 4% is the plan.

    — Ashwani Kumar Arora

Revenue

  • North America Growth Revenue · this year · High confidence double-digit, range of 10%
    we are expecting roughly double digit, which is in the range of 10%.

    — Ashwani Kumar Arora

  • Middle East Growth Revenue · 5 years · Medium confidence as per guidance
    But we will deliver as per the guidance given in 5 years.

    — Ashwani Kumar Arora

Input Costs

  • Paddy Price Trend Input Costs · FY26 · Medium confidence roughly higher by 8% to 10% average
    But we expect that as compared to last year, it will be roughly higher by 8% to 10% average.

    — Ashwani Kumar Arora

Segment Profitability

  • RTH/RTC Segment Break-even Segment Profitability · 3 years · High confidence INR350 crores mark
    this segment will break even in the EBITDA category once it crosses the INR350 crores mark and which we expect in 3 years time.

    — Sachin Gupta

What to watch in Q2 FY26

Soya meal litigation outcome

October end
Current Rebuttal filed, decision pending
Target Decision from the department

Why it matters

Resolution of a legal matter that could impact future operations or financials.

As Monika just mentioned, we have filed the rebuttal. And we are expecting October end the decision to come from the department.

Risks & concerns

  • Soya meal litigation (CVD notice)

    medium

    Company filed case brief on July 16, 2025, contesting AFA application; if AFA maintained, Ecopure can appeal to Court of International Trade. Decision expected by October end.

    Management acknowledged

  • Gross margin pressure from product mix in organic segment

    medium

    QoQ gross margin deteriorated by 200 bps due to product mix, specifically lower GP soya meal exports within the organic segment.

    Analyst acknowledged

  • High entry barriers in Middle East market

    low

    Middle East is a very mature market with high entry barriers (brand and distribution), requiring a 'slow burn' strategy for growth.

    Management acknowledged

Q&A highlights

8 direct
SG&A trend and brand investments Direct
As stated by Monika, the major increase in the revenue is on the brand investments, which we are making. So this quarter itself, my SG&A expenditure as a percentage to revenue increased by almost 1.2%, this quarter itself. This is mainly on the brand investments.

Clarifies that the increase in SG&A is a strategic investment in brand building, rather than an operational inefficiency, impacting margins.

Asked by Jolyon from Amiral Gestion

Middle East revenue degrowth Direct
So overall, what we have seen in degrowth is that we have discontinued some part of the private label business, which was not fitting into the whole strategic thing. But as far as our brands are concerned, they are growing.

Explains the reported 33% degrowth in the Middle East as a strategic portfolio rationalization, focusing on higher-margin branded business.

Asked by Foram from Abakkus

Gross margin deterioration QoQ Direct
So in this, the major contributor for the decline in this gross margin is one of my segments, the organic segment. In this organic segment, my GP margins have dropped. This is mainly because of my product mix that we sold out in the organic segment. There were certain lower GP products that were sold in this quarter itself that overall impacted my GP margins.

Provides specific reasons for the 200 bps QoQ gross margin dip, attributing it to product mix within the organic segment, particularly lower-gross-margin soya meal exports.

Asked by Hitesh Goel from Auringin Capital

Normalized growth in North America and Europe Direct
So the European sales in this quarter, if you include the Europe -- U. K. as well, that was INR376 crores in the rice and the specialty segment. Last year, it was INR239 crores. The incremental U.K. sales this year contributed almost INR80 crores. So if we eliminate, if we normalize that also, there is a 24% revenue growth that came in the European operations this year.

Clarifies the underlying organic growth rates in key geographies after accounting for the impact of acquisitions (Golden Star in NA) and new facility operations (UK plant in Europe).

Asked by Pradyumna Choudhary from JM Financial Family Office

High inventory days Direct
One of the things major in the basmati you have to age. So aging is important. So our inventory days, if you consider from the last quarter or the March quarter, yes, the inventory has reduced, but this is normal process. Because a new crop comes in September, a new crop comes in September-October. So, the inventory days get reduced after that and it builds up from September onwards.

Addresses concerns about high inventory days by explaining the necessity of aging for basmati rice and the seasonal nature of procurement, indicating it's a normal operational aspect.

Asked by Param Vora from Trinetra Asset Managers

Discontinuation of Daawat Sehat (RTH/RTC Segment) Direct
It is not on organic side. So it was under the value-added thing. So we launched fortified rice in India, which has not much appreciated by the consumer, not got response so we discontinued.

Explains the reason for degrowth in the RTH/RTC segment, highlighting a product discontinuation due to lack of consumer acceptance, indicating active portfolio management.

Asked by Pradyumna Choudhary from JM Financial Family Office

PAT growth faster than EBITDA growth Direct
So yes, it is normal. Whatever the EBITDA grows, the PAT normally grows at a faster pace if any constrain any kind of industry, any one. So yes, there are the interest and the depreciation component, which doesn't grow in the same proportion as the growth in the EBITDA percentage.

Provides a clear explanation for the projected faster growth of PAT relative to EBITDA, which is a key profitability metric for investors.

Asked by Ketan Cheddha, retail investor

Soya meal litigation update Direct
As Monika just mentioned, we have filed the rebuttal. And we are expecting October end the decision to come from the department.

Gives a specific timeline for an update on an ongoing legal matter, which could have financial implications for the company.

Asked by Amit Doshi

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

LT Foods reported its highest ever quarterly revenue of ₹2,501 crores, a 20% year-on-year (YoY) increase, and EBITDA of ₹302 crores, up 17% YoY. This robust growth was driven by increasing consumer demand, strong brand preference, entry into new markets, and improved supply chain efficiency. Despite this, the EBITDA margin saw a slight dip of 30 basis points (bps) to 12.1% from 12.4% in Q1FY25, primarily due to increased strategic investments in brand building.

Segmental Growth Drivers

The Basmati and Other Specialty Rice segment demonstrated strong performance with an 18% growth. The organic business reported a remarkable 32% growth, which normalizes to 18% when excluding the impact of soya meal exports. The snacking segment, under the Kari Kari brand, also experienced significant growth of 40% YoY. Conversely, the Ready-To-Heat (RTH) and Ready-To-Cook (RTC) segment saw a decline in revenue due to the discontinuation of Daawat Sehat, a fortified rice product that did not achieve desired consumer traction.

Geographical Performance & Strategy

North America, contributing 43% to overall revenue, grew by 32% YoY, normalizing to 18% after accounting for the Golden Star acquisition. The Royal brand maintains a dominant position with a 54% share in basmati rice imports in the region. European Continental, representing 18% of revenue, achieved a 57% YoY growth, normalizing to 24% after the UK plant became fully operational. India, contributing 31% of revenue, recorded a 10% YoY growth, with Daawat's household reach expanding to 56.2 lakh homes. The Middle East experienced a 33% degrowth due to the strategic discontinuation of non-core private label business, with branded sales showing growth.

Margin Dynamics & Brand Investments

The 30 bps decline in EBITDA margin to 12.1% was primarily attributed to increased brand investments, which led to a 1.2% increase in SG&A as a percentage of revenue. Furthermore, the gross margin deteriorated by 200 bps quarter-on-quarter (QoQ), mainly due to a shift in the product mix within the organic segment, specifically higher exports of lower-gross-margin soya meal. Management aims to maintain an EBITDA margin between 12.5% and 13% and expects brand spend to be 3% to 4% of revenue.

Capital Allocation & M&A Activities

LT Foods completed the acquisition of the remaining 45% stake in Golden Star in May 2025, solidifying its position as the #1 Jasmine rice brand in the U.S. The company is also in the process of acquiring an additional 21% stake in Leev, aiming to leverage its new B2C plant for value-accretive growth. Management projects a PAT growth CAGR of 21% and an EBITDA growth CAGR of 16%, with Return on Capital Employed (ROCE) expected to exceed 23% in the coming year, driven by efficient capital deployment.

Industry Outlook & Risks

India continues to be the largest producer and exporter of basmati rice, contributing approximately 90% of the global supply, with the category growing at a steady 7-8% CAGR. Management anticipates paddy prices for FY26 to be roughly 8-10% higher on average compared to last year. An ongoing litigation concerning a CVD notice for soya meal is progressing, with the company having filed a rebuttal and expecting a decision by October end. LT Foods emphasizes its well-diversified geographical presence as a key de-risking strategy against macroeconomic fluctuations.

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