LT FOODS

LT FOODS is the 2nd market competitor in the space of basmati rice segment in the country
right now. It has amazing prospects. IN these research report we will completely
summarize company’s future look with help of reports and financial statements and will
try to give a look at the management as well.

Content
1. Companies background
2. Management
3. Valuations
4. Ratios
5. Future prospects
6. Moat

COMPANIES BACKGROUND:
 In 1950, the founder of LT Foods, Shri Raghunath Arora, established a business
built on five integral principles of business: commitment to innovation, passion for
excellence, personal ownership, customer centricity and business ethics. (this is from
there website)

 Earlier this was started as a rice mill with the intention of a livelihood which was later
converted into an overseas brand with the famous name of dawaat and royal.

 It is also engaged in research and development to add value to rice and rice food
products. The Company’s rice product portfolio comprises brown rice, white rice,
steamed rice, parboiled rice, organic rice, quick cooking rice, value added rice and
flavoured rice in the ready to cook segment.

 The Company’s subsidiary, Nature Bio Foods Limited (NBFL) drives the ingredient
based organic food segment. It has emerged as a trusted brand, offering authentic
organic ingredients to consumers across the markets of the US and Europe.
 KEY POINTS:

Brands:

The company owns several rice brands such as Daawat,

Royal, Heritage, Devaaya, Gold Seal Indus Valley and
817 Elephant. Its Flagship Brands “Daawat” and “Royal”
enjoy leadership positions in the market of basmati rice in
India and US with market share of 27% and 50%
respectively.

Key Markets:

Company's biggest market is the US market which

accounts for 37% of total revenue, followed by Indian
market and the European Market which accounts for 35%
and 14% of total revenues respectively.
[1] In May, 2020, Saudi Agricultural & Livestock
Investment Company (SALIC) acquired 30% stake in
company's subsidiary Daawat Foods Ltd from minority
interests at a price of 17 Million USD. This acquisition has
evolved in a partnership among the Saudi agriculture giant
SALIC and LT Foods Ltd.
[2] It is a leading partner of Sustainable Rice Platform
(SRP), a UN Environment and International Rice
Research Institute initiative. LT Foods has a score of
96/100 and is among the best growing companies as per
Sustainable Rice Platform standards.
 Companies important standing:

LT Foods Ltd. (LTFL) is one of the leading basmati rice players in India
having a strong foothold both in exports (55% of FY17 revenue) &
domestic market (45%).
Key brands include Daawat (leading brand in
India), Royal (#1 brand in USA) and ecoLife (organic food). With growing
global demand for basmati and limited supply, we expect LTFL to
witness steady volume growth with improving realizations on back of
increased branded business.
We forecast 12.2%/25.7% revenue/adj.
PAT CAGR over FY17-20E and an EBITDA margin improvement of
127bps
to 12.5%.
We initiate coverage with a BUY rating valuing the stock at
12x FY20E EPS of INR10.4 with target price of INR125.
Domestic consumption to see continued demand growth:
Domestic market remains a key growth driver for the branded basmati
rice
players like LTFL as the Indian consumers move towards branded foods
on the back of rising affluence.
The shift from unbranded basmati (~73% in FY17) to branded is
expected to continue due to better quality.
We expect LTFL to be one of the key beneficiaries of this changing
industry dynamics owing to its strong brand positioning, diverse
product portfolio catering varied price points and wide distribution
network. (companies concalls and reports)
 MANAGEMENT

o Mr. Vijay Kumar Arora, Chairman & Managing

Director
o Mr. Surinder Kumar Arora, Managing Director
o Mr. Ashwani Kumar Arora, MD & CEO
o Mr. Vivek Chandra, CEO Global Branded Business
o Mr. Ashok Kumar Arora, President (Punjab
Operations)
o Ms. Monika Chawla Jaggia, CS and VP (Finance &
Strategy)

Management of the company has integrity and

do understand the business with great
information and management.
The management is optimistic about the future
of increasing their roe to up 23% which I think
can be amazing but difficult to achieve.
The company has tried to achieve that since
2020 but due to inflationary situation and
lockdown it has improved it to 16-18 % but
still a long way to go.