L T Foods — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

LT Foods reported strong top-line growth in Q2 and H1 FY26, driven by strategic brand investments and expansion across segments and geographies. The company completed a key acquisition in Europe to bolster its processed food portfolio. However, profitability was impacted by higher brand investments, digital initiatives, and initial challenges in the organic segment, leading to a decline in EBITDA and PAT margins. Production constraints in the RTC/RTE segment also limited growth potential.

Highlights

  • Highest ever quarterly revenue of ₹2,772 crores in Q2 FY26, growing 30% YoY (normalized 12% excluding Golden Star and U.S. Tariff).

  • Robust H1 FY26 revenue of ₹5,273 crores, demonstrating 25% YoY growth (normalized 15%).

  • EBITDA grew 24% YoY to ₹316 crores in Q2 FY26 and 20% YoY to ₹619 crores in H1 FY26.

  • Strategic acquisition of Global Green Kft for £25 million, expanding presence in European processed food market and expected to contribute an additional £40 million in revenue.

  • Organic segment delivered strong 26% YoY growth in H1 FY26, driven by rising global demand for sustainable food choices.

Concerns

  • Q2 FY26 EBITDA margin declined by 60 bps to 11.4% from 12% in Q2 FY25, primarily due to increased brand investment and strategic initiatives.

  • H1 FY26 PAT margin was 6.3%, down from 7.2% in the prior year, influenced by brand investments, digital initiatives, and underperformance in the organic segment.

  • RTC/RTE segment production was constrained due to a 6-9 month delay in commissioning the second unit, preventing full capture of growing demand.

  • Ongoing negotiations for 20-50% U.S. tariffs, with only initial 10% duty partly passed on, creating uncertainty on future pricing power.

Key financials

3 periods

Headline

  • ROCE
    22%

Q2 FY26

  • Revenue
    ₹2,772 Cr
    YoY +30%
  • EBITDA
    ₹316 Cr
    YoY +24%
  • EBITDA Margin
    11.4%
    YoY -0.6%

H1

  • FY26 Revenue
    ₹5,273 Cr
    YoY +25%
  • FY26 EBITDA
    ₹619 Cr
    YoY +20%
  • FY26 PAT Margin
    6.3%

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
    24% Growth11.4% Normalized Growth (excl. Golden Star & U.S. Tariff)
  • Organic segment
    26% H1 FY26 Growth

Capital allocation

high confidence
  • Capex Capex disclosed
    • Rotterdam facility for Nature Bio Foods Ltd ₹20 Cr
    • Additional investment in Rotterdam facility over next three years ₹15 Cr
    • Factory in London (via LT Foods U.K. Limited) for leverage improvement GBP 5 Mn
    Under our organic business arm, Nature Bio Foods Ltd has entered the B2C segment in Europe with the inauguration of a new facility in Rotterdam. The initial capital expenditure for this facility was approximately Rs. 20 crores, with a planned additional investment of Rs. 15 crores over the next three years. (page 5) Okay. And recently we have done an investment of £5 million in our step-down subsidiary which is LT Foods U.K. Limited. So, how are we planning to deploy the capital in the business? (Azharuddin Jariwala, page 7) So, basically that is for the leverage. The company leveraged once. So, in order to improve the leverage ratios, investments are being made in one of my subsidiaries that is in the UK. So, we have set up our factory in London. So, in order to instill the capital and have a better debt-to-equity and debt-to-EBITDA ratio, the kind of funding is being given. (Sachin Gupta, page 7)
  • Debt Gross ₹1,200 Cr Cost 7%
    And also you have short term borrowings of around something Rs. 1,200 crores. (Prashanth, page 14) Overall, on the rupee terms I am talking about, that is around 7%. That includes the bank charges as well. (Sachin Gupta, page 15)
  • M&A Global Green Kft (Hungary) Acquisition · Signed · Consideration ₹[object Object] (cash)

    Expanded presence in European processed can food market, entry into £15 billion market segment, strengthens competitive positioning, establishes third manufacturing hub in Hungary.

    Expected to contribute an additional £40 million in revenue subject to FDI approval.

    During the quarter, LT Foods strategically expanded its presence in the European processed can food market through the acquisition of Hungary-based Global Green Kft. This acquisition marked entry into the £15 billion market segment... The transaction was then at an enterprise value of £25 million, contributing an additional a £40 million in revenue subject to FDI approval. (page 4) So, we have signed SHA. So, now we are waiting for the approval from the Hungary government. And then, once approval is there, then the transaction will consummate and it will take 2 to 3 months. (Ashwani Kumar Arora, page 10) 100% acquisition, basically, because you asked for the structure. So, after the FDI approval, it will become 100% acquired by LT Foods, a fellow subsidiary. (Monika Chawla Jaggia, page 17) So, yes, it is an all-cash deal. (Sachin Gupta, page 17) So, yes, there will be certainly the intangibles. It will be in the tune of €6 million to €7 million of intangibles that will be there. The remaining will be the asset value. (Sachin Gupta, page 18)
  • Liquidity Cash ₹600 Cr Cash is primarily in India for procurement season, while borrowings are for foreign entities' working capital due to inability to transfer funds.
    If we look at the balance sheet as of 30th September, you have cash and bank balances of around Rs. 600 plus crores. (Prashanth, page 14) So, India, we are cash surplus. Internationally, we have a borrowing. So, that's what Sachin wanted to explain. We can't transfer. But, whatever the surplus money we have. So, we are getting same better returns than what we are paying. (Ashwani Kumar Arora, page 15)

Guidance & targets

Revenue

  • Incremental revenue from Rotterdam facility Revenue · next five years (starting FY26-27) · High confidence ₹400 crores
    The revenue acceleration is expected to begin in the financial year 2026-2027, with an estimated incremental revenue of Rs. 400 crores over the next five years, driven by this strategic investment.

    — Monika Chawla Jaggia

Market Share

  • Middle East business size Market Share · next five years · Medium confidence sizable business
    And if you have seen in Saudi Arabia we are building the business. So, hopefully, in the next five years, we will be able to build a sizable business in the Middle East.

    — Ashwani Kumar Arora

Profitability

  • RTC/RTE segment break-even/EBITDA positive Profitability · delayed by 6-9 months · Medium confidence ₹400 crores
    So, yes, Meet, we are in line. So, yes, because of this delayed production one, so we are delayed by almost 6 to 9 months delay that has happened. So, yes, the kind of break-even will also be certainly deferred to 6 months to 7 months. So, that is there. But we are on line for achieving the 400 crores and having a break-even.

    — Sachin Gupta

Market context

  • Revenue from Global Green Kft acquisition Revenue · annual, post FDI approval · High confidence £40 million
    The transaction was then at an enterprise value of £25 million, contributing an additional a £40 million in revenue subject to FDI approval.

    — Monika Chawla Jaggia

What to watch in Q3 FY26

U.S. Tariff Negotiation Outcome

next two months
Current 20-50% duties under negotiation
Target Clarity on tariff pass-through and impact

Why it matters

Resolution of tariff negotiations will impact future pricing strategy and profitability in the U.S. market.

I think the next two months will tell us the impact of this, but we are in the process. (Ashwani Kumar Arora, page 13)

Risks & concerns

  • U.S. Tariff Impact on Pricing

    medium

    Ongoing negotiations for 20-50% duties, with only initial 10% partly passed on, creating uncertainty on future pricing power and margins.

    Management acknowledged

  • Organic Segment Margin Pressure

    medium

    Margins impacted by investments in European private label infrastructure and moving operations to third-party due to capacity expansion, along with global non-Basmati price pressure.

    Management acknowledged

  • RTC/RTE Production Constraints

    medium

    Demand is growing but cannot be fully captured due to a 6-9 month delay in commissioning the second production unit.

    Management acknowledged

  • PAT Margin Compression

    medium

    PAT margins declined due to increased brand investment, digital initiatives, and the underperformance of the organic segment, though gross margins are improving.

    Management acknowledged

Q&A highlights

7 direct
Working Capital - Payable Days Direct
My working capital days on the payable side from 43 days basis, the current 6-month data from the last 28 days. So, there is an increase of 15 days. This is basically on account of better negotiations which we have done from the vendors.

Clarifies the reason for an increase in payable days, indicating improved vendor negotiation rather than operational stress.

Asked by Azharuddin Jariwala

Impact of U.S. Tariff and Normalized Growth Partial
So, yes. If you look at our financial numbers, almost Rs. 353 crores have come because of the consolidation of the Golden Star. Yes, we are in the process of passing it on to our customers the increase. So, that is to be seen in the coming quarters. ... So, there are two parts of duty. First the 10% duty was imposed, then 25% and then 50%. So, the first phase duty we have negotiated and we have passed on and the impact is of that. Now duty of 20%, 50% that we are in the process of negotiation with our customer.

Explains how U.S. tariffs are being managed and passed on, indicating ongoing negotiations for higher duties and potential future impact on pricing.

Asked by Amit Doshi

Sequential Growth and Margins in Organic & RTH Business Direct
See, we have invested in Europe for creating a private label infrastructure here, which will make us enter into the new channel. And now that we already have that establishment, in the last six months or H1, we had to move a lot of our operations to third party, given that we were expanding 2-3 times of our capacities, what we had before. And to make that possible in the six months of period, we had to move our operations to third party. That has made us spend some extra cost, which has impacted our margins.

Provides a detailed explanation for margin pressure in the organic segment, linking it to strategic investments and capacity expansion challenges.

Asked by Amit Doshi

PAT Margin Decline and Future Outlook Direct
But if you see, our ROCE has started, it's the impact of the mix, growing, adding Jasmine rice business, where absolute margin in percentage may be lower, but in terms of ROCE it is high. So, if you see, our ROCE has improved to, Sachin correct me, it's around 22%. ... That's a resultant of a lot of investment in the brands and digital. All these investments, if you see, the gross margins are improving.

Management attributes PAT margin decline to strategic investments in brands and digital, and the mix effect of the Jasmine rice business, while highlighting improved ROCE.

Asked by Ishant Lalwani

Middle East Market Strategy Direct
The Middle East is very big, so as earlier also, Middle East is one of our focus market. So, we have started from kind of green field. So, it will take time, but it is in the focus. And if you have seen in Saudi Arabia we are building the business. So, hopefully, in the next five years, we will be able to build a sizable business in the Middle East.

Outlines the long-term strategic focus and growth ambitions for the Middle East market, starting from a greenfield approach.

Asked by Hitesh Goel

Cash vs. Short-Term Borrowings Direct
Yes, you are right in that sense. But at the same time, you need to understand the geographical locations at which we operate. There are different companies in which we are operational. So, there are foreign companies. We can't have, because of my foreign companies, they are relatively new. So, there you require the loan for the working capital. Whereas the same kind of cash, because in India, the procurement season hasn't started. We are sitting on the cash. So, that will be utilized in the coming quarters. So, that is because of my global operations.

Clarifies the company's capital structure, explaining why cash in India cannot offset borrowings in foreign subsidiaries due to geographical and operational constraints.

Asked by Prashanth

Basmati Segment Outlook in Domestic Market Direct
So, Meet, India category is growing in the range of 7% to 8%. And similarly, international also is the latest thing. So, as far as so, demand is good. Production is at par with the last year, but there is a carryover from the last year. So, we see no issue on the supply side. I hope that answer your question.

Provides a positive outlook on the domestic Basmati market, confirming healthy demand and sufficient supply for future growth.

Asked by Meet Jain

Global Green Kft Acquisition Details Direct
So, the deal size is €25 million. So, that's the enterprise value we are buying at. And we have signed the SHA and we will get an approval in coming 2-3 months. ... 100% acquisition, basically, because you asked for the structure. So, after the FDI approval, it will become 100% acquired by LT Foods, a fellow subsidiary. ... So, yes, it is an all-cash deal.

Details the financial and structural aspects of the recent Global Green Kft acquisition, including enterprise value, ownership, and payment method.

Asked by Rajveer Tandon

3 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

LT Foods achieved its highest ever quarterly revenue of ₹2,772 crores in Q2 FY26, representing a 30% year-on-year growth, with a normalized growth of 12% excluding Golden Star and U.S. Tariff. For the first half of FY26, revenue reached ₹5,273 crores, a 25% YoY increase (normalized 15%). EBITDA for Q2 FY26 was ₹316 crores, up 24% YoY, and ₹619 crores for H1 FY26, up 20% YoY. The company maintains a strong investment-grade credit rating of CRISIL AA- A1+ with a positive outlook.

Strategic Acquisitions and European Expansion

During the quarter, LT Foods strategically acquired Hungary-based Global Green Kft for an enterprise value of £25 million. This all-cash acquisition, which will be 100% owned by a fellow subsidiary, marks the company's entry into the £15 billion European processed can food market. The deal is expected to contribute an additional £40 million in revenue annually, subject to FDI approval, which is anticipated within 2-3 months. This move establishes a third manufacturing hub in Hungary, enhancing LT Foods' footprint across Central and Southern Europe.

Segmental and Geographical Performance

The Basmati and other specialty rice businesses recorded a 24% growth, or 11.4% normalized growth excluding Golden Star and U.S. tariff. The organic segment delivered a robust 26% year-on-year growth in H1 FY26. Geographically, North America accounts for 46% of revenue, growing 47% YoY (normalized 16%), with the Royal brand holding a 54% market share. India contributed 30% of revenue with 13% YoY growth, and Europe/UK contributed 15% with 31% YoY growth. The Middle East and rest of the world comprise 9% of revenue, with specific focus on building a sizable business in Saudi Arabia over the next five years.

Working Capital and Capital Structure

The company's working capital payable days increased by 15 days, attributed to better negotiations with vendors. LT Foods reported cash and bank balances of approximately ₹600 crores, alongside short-term borrowings of around ₹1,200 crores. Management clarified that cash in India, primarily for procurement, cannot be transferred to offset borrowings in foreign subsidiaries, which are used for working capital at an average blended cost of debt of about 7%.

PAT Margin Dynamics and Investments

The Q2 FY26 EBITDA margin saw a 60 bps decline to 11.4% from 12% in Q2 FY25, primarily due to increased brand investments and strategic digital initiatives. H1 FY26 PAT margin stood at 6.3%, down from 7.2% in the previous year. This compression was also influenced by the consolidation of Golden Star and initial underperformance in the organic segment. Despite this, the company's ROCE improved to 22%, reflecting efficient capital deployment.

U.S. Tariff and Organic Segment Challenges

The company is navigating U.S. tariffs, having partly passed on the initial 10% duty, but is still in negotiations for the 20-50% duties. The organic segment's margins were impacted by significant investments in European private label infrastructure and the need to use third-party operations due to capacity expansion. Additionally, the RTC/RTE segment faced production constraints, with a 6-9 month delay in commissioning a second unit, preventing the company from fully capitalizing on growing demand and delaying the segment's break-even target of ₹400 crores.

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