L T Foods

LT Foods reported a strong Q3 FY25 with consolidated revenue growing 17% year-on-year to INR 2,288 crores, driven by increased sales across all segments. Gross profit expanded by 22%, leading to a 125 basis points improvement in gross profit margin to 33.9%. EBITDA also saw a 7% increase to INR 263 crores, with an EBITDA margin of 11.5%. However, PAT for the quarter decreased by 4.7% to INR 145 crores, and EPS fell by 5% to INR 4.13, primarily due to higher logistic costs.

For the nine months ended December 31, 2024, consolidated revenue grew 14% to INR 6,510 crores. Gross profit margin expanded by 145 basis points to 33.8%, and EBITDA increased by 7% to INR 777 crores. Despite this, the EBITDA margin for the nine-month period was 11.9%, 80 basis points lower than the previous year. PAT for the nine months was marginally higher by 1% at INR 451 crores, with EPS remaining flat at INR 12.81. The company maintained a healthy balance sheet with a debt-to-equity ratio of 0.3 and a debt-to-EBITDA ratio of 1.2, improving from 1.3 last year.

Elevated freight costs significantly impacted profitability in Q3 FY25, particularly affecting associate earnings from Golden Star, which declined to INR 4 crores from INR 11.7 crores last year. Logistic costs as a percentage of revenue rose to 7.1% in Q3 FY25. Management expects freight rates to soften, with the full benefit anticipated to reflect in Q1 FY26 for international operations and Q2 FY26 for overall margins, targeting a reduction in logistic cost to 6% of revenue. The company anticipates a 100 basis points margin improvement next year.

The organic food segment demonstrated strong growth, up 37% for the year, with a target EBITDA margin of 14%+. The company projects double-digit growth of 10% for this segment next year. Geographically, the Middle East was the fastest-growing territory with 37% growth on a nine-month basis, while the US market grew 17%. Domestic demand in India, however, was slower, leading to a 2% market share reduction in non-profitable Basmati segments as the company prioritized margins.

LT Foods incurred INR 164 crores in capex during the first nine months of FY25, against a full-year guidance of INR 200 crores. The US facility is expected to be operational by May 2025, with related capex to be spent in Q4 FY25. For FY26, the company plans capex in the range of INR 150-200 crores. In Saudi Arabia, a five-year plan targets SAR 435 million in revenue, focusing on convenience platforms and packaging facilities in the future.

The company is in the process of acquiring the remaining 4% stake in Raghunath Agro Private Limited from its subsidiary, Daawat Foods, to make it a 100% subsidiary, followed by a merger into LT Foods. Regarding a pending insurance claim, the Supreme Court's final verdict is expected by March 10th, 2025, with the company anticipating receipt of funds. However, the recording of the profit from this claim is contingent upon a High Court verdict.