LT FOODS

Uncrowned king of Basmati rice

LT Foods is a mid-cap company in the rice and riceprocessing industry, with 70 years of experience in offering a diverse range of rice products led by Basmati rice under the brands ‘Daawat’ and ‘Royal’. The company operates from ‘farm to fork’, ensuring comprehensive control over the value chain. With a significant presence in over 80 countries, the company clocked 15% revenue CAGR over fiscal years 2019-2024. It focuses on expanding margins while maintaining a strong marketshare globally.

The company has made rapid strides on the financial front, with sales turnover rising more than three and a half times from Rs 2,206 crore in fiscal 2013 to Rs 7,772 crore in fiscal 2024, operating profit spurting over four times from Rs 217 crore to Rs 938 crore, and the profit at net level shooting up almost 10 times from Rs 60 crore to Rs 599 crore. What is more, prospects for the company going ahead are all the more encouraging. Consider:

The company is a leading player in the Basmati rice variety, which accounts for 4% of the global rice market ($ 376.5 billion in 2024). Demand for Basmati rice is rising, and according to experts Basmati sales are likely to expand by 9% CAGR over 2024-32, led by rising immigration, increasing disposable incomes, a shift to packaged products, and high-end health awareness. India is a leading global producer of Basmati rice, accounting for a 75 per cent marketshare while comprising only 4% of India’s domestic consumption. LT Foods, being a key Indian player, stands to gain with increasing penetration of Basmati rice globally.

BRAND RECALL

Credit goes to LT Foods for transforming Indian rice from a large commodity to a branded product. With a marketshare of 30 per cent in India and 50% in the US, the company has diversified into organic foods, which is around 9 per cent of revenues at present and is expected to double going ahead.

LT Foods has emerged as the king of the Basmati market on the global stage. It has achieved an impressive 17% CAGR in global revenues over fiscals 2019-2024 (69% revenue share in fiscal 2024). The company has devised a strategy to not only maintain its strong marketshare in various countries but also increase it, as well as spread its footprint to over 100 countries. Its strategic expansion in the US and Europe will drive growth speedily, while the Middle East has rebounded with a remarkable 26% surge in 2024. Almost 70% of India’s Basmati rice exports in fiscal 2024 went to the Middle East, with Saudi Arabia emerging as the top destination with a 21.4% share while Iran’s share dropped to 11.6% on account of geopolitical issues. The company’s international growth is/will be driven by geographic expansion, innovative product launches and acquisitions, and will benefit from higher price realisation abroad.

BASMATI AT HOME

Demand for Basmati rice at home is on the rise, though at present it accounts for only 4 per cent of domestic consumption. The Indian rice market includes Basmati and non-Basmati packaged and unpackaged categories. With growing migration to cities, rising incomes, an improving standard of life leading to a shift toward packaged products, a growing inclination towards branded products, and an increasing fast food culture, demand for Basmati rice is expected to rise significantly at home going ahead, along with a rising trend in exports. LT Foods, being the undisputed leader in exports of Basmati rice, will be a major beneficiary of this trend.

This trend is quite visible now. LT Foods has achieved a strong marketshare across regions through branding activities and distribution expansion (today, the company has over 1,400 global distribution points). The Daawat brand commands a 30% marketshare in India, up from 20% in fiscal 2019. Royal and Golden Star have emerged as leading brands in the US market (Royal has over 50% marketshare), while 817 Elephant is the No. 2 brand in Canada. LT Foods brands have a 30% marketshare in Northern Europe and 12-13% in the Far East region (the company is the leader in 11 out of 16 countries in this region).

LT Foods has come a long way from being just a rice company to evolving as a FMCG entity, having built a diverse portfolio to meet the needs for all meal occasions. For this, the company has forayed into new segments such as organic foods and ingredients, and C&H segments. As a pioneer in the organic food sector (over two decades of presence), this segment accounts for 9 per cent of total revenues and there are plans to achieve double-digit growth.

B2B FOCUS

The company primarily functions as a B2B supplier, partnering with over 64,000 farmers across 9,400 hectares of certified organic farmland to provide diverse products. Additionally, it is establishing a manufacturing facility in Uganda to export soymeal to the US and foods of high-demand crops. The global organic food market is projected to report a 15.9% CAGR over the fiscals 2022- 27. LT Foods aims to capitalise on this opportunity by expanding its branded organic offerings, particularly its Daawat Ecolife brand.

• The company primarily functions as a B2B supplier, partnering with over 64,000 farmers across 9,400 hectares of certified organic farmland to provide diverse products. Additionally, it is establishing a manufacturing facility in Uganda to export soymeal to the US and foods of high-demand crops. The global organic food market is projected to report a 15.9% CAGR over the fiscals 2022- 27. LT Foods aims to capitalise on this opportunity by expanding its branded organic offerings, particularly its Daawat Ecolife brand.
• Besides expanding its marketshare in the domestic market, the company has chalked out plans to grow its global reach. Today, it has a presence in over 80 countries (69% revenue share in 2024), achieving a 17% CAGR in international revenues. Its global business features leading brands like Daawat, Royal, Indus Vallay, Devaaya, Daawat Rozana, 817 Elephant and Golden Star, with a focus on North Amercia, Europe and the Middle East. It plans to fuel its global growth through new geography expansion, innovative product launches and brand acquisition. In FY 2025 and FY 2026, we expect the company to register an EPS of Rs 18.5 and Rs 24.3 respectively. In FY 2027 it can register an EPS of Rs 28.9. The scrip trades at Rs 421. P/E on the FY 2027 EPS works out to 14.5. Recently, the company has launched a non-genetically modified organism (Non-GMO) certified global gourmet food - DAWAAT Jasmine Thai rice for Indian consumers. Known for its naturally fragrant aroma and soft texture, DAAWAT Jasmine Thai Rice is the authentic Thai Hom Mali, sourced from Thailand. This latest addition to the DAAWAT portfolio underlines the company's commitment to introducing global gourmet food to Indian consumers, catering to the aspirations of those seeking diverse global culinary experiences at home. It also marks another milestone in the company's journey to diversify its product range and align with the evolving food preferences of consumers. DAAWAT Jasmine Thai Rice pairs excellently with classic Thai curries to even fusion dishes. Its versatility makes it an ideal choice for any Thai and oriental recipe. DAAWAT Jasmine Thai Rice has been launched nationally on all leading E-Commerce platforms such as Amazon, Blinkit, Zepto, Big Basket, Swiggy Instamart and select gourmet stores. The management considers this development as a significant step in company’s premiumization strategy as it will continue to expand its portfolio with highquality, specialty rice and it is a testament to their commitment to innovation and understanding of the modern consumers’ palate. The company is expanding into the future food preferences of millennials by offering organic food in global markets and supplying organic food-ingredients to leading businesses.

PERFORMANCE INDICATORS (Rs. in crore)

GRAUER & WEIL (INDIA)

Corrosion buster par excellence

Sixty years old, Mumbai-headquartered Grauer & Well, popularly known as ‘Growel’, is a trail blazer in surface finishing with a track record spanning six decades. Growel is the only company in India, and one of the few in the world, that offers complete corrosion protection solutions on all types of substrates across various industry segments. The company’s broad business segments are threesurface finishing (which accounts for the lion’s share – around 83 per cent — of revenues) engineering (13%) and shopping malls (4%). Broadly speaking, the manufacturing activity has five divisions — chemicals, engineering, paints, lubricants and realty.

The company’s main plant at Pune manufactures a wide range of surface finishing and wastewater treatment equipment, tailormade to meet the specific surface finishing requirements of every industry. By now, it has commissioned 300+ plants of varied types worldwide.

The company’s solutions address the surface finishing and protection needs of various sectors, including Automobiles, Aerospace, Defence, Fasteners, Hardware, Electronics, Electrical, White Goods, Jewellery, PSUs and Railways.

SALES TREBLE

The company is doing extremely well on the financial front. During the last 12 years, its sales turnover has more than trebled from Rs 323 crore in fiscal 2013 to Rs 1,068 crore in 2024. Operating profit has also more than trebled from Rs 53 crore to Rs 191 crore and the profit at net level has spurted more than seven times from Rs 20 crore to Rs 146 crore. What is more, prospects for the company are all the more promising going ahead. Consider:

• All its divisions are above-average and turn out highquality products. The chemicals division offers a plethora of solutions under one roof, including electroplating, and speciality chemicals, zinc flake coatings, and phosphating and anodizing processes to address surface finishing and protection needs across a range of industries. Its paints division offers a spectrum of high-performance customised coating solutions for industrial solutions. Its six strategically located manufacturing plants across India are equipped to produce an extensive array of surface coatings.
• The company delivers comprehensive solutions for manufacturing and supplying fully automated surface treatment plants and water as well as wastewater treatment equipment. The engineering division in Pune is primarily engaged in conceptualising and installing different types of equipment for meeting the surface finishing requirements of various industries

CHEM SOLUTIONS

• The electroplating chemical division has a wide basket of products and the chemicals manufactured by the company find applications in various industries like automobiles, home fittings, consumer durables, and gems & jewellery. Growel benefits from a welldiversified product portfolio in its chemical segment.
• The engineering division is involved in manufacturing and providing turnkey solutions for electroplating plants, effluent treatment plants and other engineering products.
• The diversified revenue has helped the company reduce its dependency on, as well as tide over any downturn in, a particular business segment.

R&D STRENGTH

• Growel is strong in R&D and is working towards cutting-edge technologies in the areas of surface coatings, electrical paints and metal working fluids which will allow it to maintain its leadership in the years to come. It is also constructing a new R&D centre in Vasai near Mumbai, which is expected to be operational in fiscal 2026.
• The company’s financial position is very strong, with reserves at the end of March 2024 standing at Rs 824 crore – more than 18 times its equity capital of Rs 45 crore, that too after issuing 1:1 bonus shares. The debt burden is negligible – less than 1.5 per cent (at Rs 13 crore) of its turnover (Rs 10.68 crore) and its interest burden is insignificant at just Rs 4 crore. The scrip trades at Rs 103. P/E on the FY 2026 EPS works out to 23.0.

PERFORMANCE INDICATORS (Rs. in crore)