LT Foods Limited (LTFOODS.BO) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to LT Foods Q2 FY '26 Earnings Conference Call hosted by Motilal Oswal Financial Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Meet Jain from Motilal Oswal Institutional Equities. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and a very warm welcome to LT Foods Limited Q2 FY '26 Results Earnings Call hosted by Motilal Oswal Financial Services Limited. On the call today, we have the management team being represented by Mr. Ashwani Kumar Arora, MD and CEO; Mr. Sachin Gupta, CFO; Ms. Monika Chawla Jaggia, Chief Corporate Development Officer. We will begin the call with key thoughts from the management team. Thereafter, we will open the floor for Q&A session. I would now like to request the management to share their perspective on the performance of the company. Thank you, and over to you, ma'am.

Thank you, Meet, and good afternoon, everyone. Welcome you all to LT Foods Limited Q2 Financial Year '26 Earnings Conference Call. Please note that any statements made or discussed during this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. A detailed disclaimer in this regard has been included in the investor presentation that has been shared on both the stock exchanges that is NSE and BSE. The results documents are available on company's website as well as stock exchanges. A transcript of this call will also be made available on the Investors section of company's website. I would like to give you the overview of the business. During quarter 2 financial year '26, LT Foods achieved its highest ever quarterly revenue of INR 2,772 crores, representing growth of 30%, and a normalized growth of 12%, excluding Golden Star and U.S. tariff and EBITDA of INR 316 crores representing growth of 24% compared to quarter 2 financial year '25. For the first half of financial year '26, the company reported a record half year revenue of INR 5,273 crores demonstrating year-on-year growth of 25%, normalized growth of 15%, excluding Golden Star and U.S. tariff and EBITDA of INR 619 crores representing growth of 20% compared to first half of financial year '25. This robust performance is attributed to the strategic brand investments, sustained growth across multiple segments and geographies and increasing consumer demand and preference for our brands and improved distribution channels across key markets. The company reported an EBITDA margin of 11.4% in Q2 financial year '26, down by 60 basis points from 12% in quarter 2 financial year '25, primarily due to increased brand investments and certain strategic initiatives and digitalization initiatives undertaken by the company. Over the long term, the company has demonstrated consistent performance with a 5-year compounded revenue growth of 16% and compounded PAT growth of 21%. Additionally, LT Foods maintained a strong investment-grade credit rating of CRISIL AA- A1+ with a ‘Positive’ rating outlook revised in July '25. During the quarter, LT Foods strategically expanded its presence in the European processed and can food market through the acquisition of Hungary-based Global Green Europe Kft. This acquisition marks entry into the GBP 15 billion market segment, compounding LT Foods existing RTE and RTC packaged food portfolio. The transaction was done at enterprise value of GBP 25 million, contributing an additional EUR 40 million in revenue subject to FDI approval. Management expects this acquisition to strengthen the group's competitive positioning and support sustainable long-term growth. It also establishes a third manufacturing hub in Hungary, reinforcing LT Foods footprint across Central and Southern Europe and improving regional operational capabilities. I would like to provide an update on Countervailing Duty (CVD) concerning Ecopure Specialities Limited (a fellow subsidiary of LT Foods). A public hearing was conducted on September 16, '25, where both the parties presented their arguments before the U.S. Department of Commerce. The final determination has been extended by one month following the hearing and is now anticipated by November 17, 2025. Segment-wise update, Basmati & Other Speciality Rice business recorded a 24% that is otherwise normalized growth is 11.4%, excluding the Golden Star and U.S. tariff, Y-o-Y growth in first half of '26, driven by enhanced brand investments and focused marketing initiatives that continue to strengthen consumer trends. Organic segment delivered a robust 26% year-on-year growth in the first half of '26, reflecting the rising global demand for sustainable food choices and our strong presence across key international markets. Under our organic business arm, Nature Bio Foods Limited has entered the B2C segment in Europe with the inauguration of new facility in the Rotterdam. The initial capital expenditure for this facility was approximately INR 20 crores with a planned additional investment of INR 15 crores over the next 3 years. With this, leveraging the new capability, the company will sustain sourcing from India and Africa by expanding the procurement from over 20 countries worldwide, aiming to supply premium organic ingredient to European market. The revenue acceleration is expected to begin financial year '26, '27 with an estimated incremental revenue of INR 400 crores over the next 5 years driven by this strategic investment. With the strategic move focusing on building a stronger RTH & RTC portfolio, the company expanded its portfolio with the launch of Daawat Thai Green Curry Rice Kit and the introduction of Daawat Thai Green Curry Rice Kit was followed by a strong performance of Daawat Biryani Kit, which has crossed 1 million units of annual consumption since it started. Geography-wise update, the North America accounts for 46% of our revenue and continues to be a key growth driver with a 47% year-on-year revenue growth, the normalized growth of 16% and excluding Golden Star and U.S. tariffs. Our flagship brand revenue, ‘Royal’ holds a dominant position, commanding a 54% market share in the region and 61% share in the Basmati Rice import in U.S. ‘Golden Star’ now #1 Jasmine rice brand. India constitutes 30% of our revenue recording a 13% year-on-year growth. Our brand collectively hold a 36% market share with category leadership in the Western region. In India, the household reach of Daawat has grown significantly from 45.56 lakh homes in March 2023 to 56.2 lakh homes in March 2025. Europe and U.K. currently contributes 15% of our overall revenue. Our progress in this region has been robust, achieving 31% year-on-year growth driven by expanding market reach and rising demand for our differentiated offerings. Besides, we have made investments in people and infrastructure in EU. The Middle East and rest of the world constitutes the remaining 9% of our revenue. Of this INR 28 crores is from the Saudi Arabia. Looking ahead to financial year '26, our priority is to build a stronger Future-ready more robust LT Foods by deepening brand equity, accelerating market expansion, investing in digital transformation and evolving through strategic partnerships. We remain committed to delivering products that represent trust, quality and value to consumer worldwide. With this, I would now like to hand over the call to the moderator to open the floor for question and answer, please.

[Operator Instructions] The first question is from the line of Azharuddin Zariwala from Samiksha Capital.

My first question is on the working capital days. [Indiscernible] The days have increased from 19 days to 30 days. Can you please throw some light on that.

Our working capital days [Indiscernible] from 43 days, this is the current [Indiscernible] data from the last 28 days, so there is an increase of 15 days, this is basically on account of better association [Indiscernible] that we have done from the vendor so that has increased working capital days by 15 days. To compare it with year-on-year basis.

Recently you have done investment of GBP 5 million in your subsidiary, Specialty Rice and Rice Food Manufacturing business in the UK [Indiscernible]; so how are we planning to deploy the capital in the business?

That is for the leverage, the company leverage won [Indiscernible], in order to improve the leverage ratios, the investment is made in one of the subsidiaries, that is in the UK. We have set up a factory in London, so in order to build the capital and have a better debt to equity and better debt to EBITDA ratios, this kind of funding is there.

The next question is from the line of Amit Doshi from Care Portfolio Managers Private.

This is about the volume growth of 23% and corresponding revenue normalized was 11%, so what would be normalized volume growth and how have you accounted for this U.S. tariff part? So, if you just can clarify so we could understand it better.

So yes, if you talk about the U.S. tariff, so certain portion has been the increment revenue that has been there in the financial itself. If we normalize that revenue itself; and yes in this half year, the Golden Star has also got [Indiscernible] consolidated; so if we normalize, both the revenues, our revenue has been increased on Y-o-Y basis for 14.5%. That is the growth.

Normalized volume growth.

The normal normalized volume growth was 23%, that was there, so volume growth, if we reduce the Golden Star in this, it will be around 18%.

Okay. So when you say US tariffs face the exclude [Indiscernible], I understand that Golden Star had roughly INR 300 crores quarterly run rate at least till last quarter. So whatever INR 130 crores, INR 150 crores is impact on account of U.S. tariff. So that 50% of the goods that we sold in the US, it means that we have passed on all the tariff to the end consumer.

So yes, if you look at our financial numbers, almost INR 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 to increase the impact. So yes, that is to be seen in the coming quarters.

So, there are 2 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. The now duty 2050 that we are in the process of negotiation with our customers.

But in September, we would have already done something, right?

Yes. That's how what Sachin just said. The initial duty, which is 10%, partly we have passed on.

Okay. Okay. Okay. So, on the organic and the RTH business, both have not grown sequentially. Any reason because organic, we have just last quarter, we did this U.K. tie-ups and all. So anything that you would want to comment on that?

Yes. So Rohan will comment on this. So as far as revenue is concerned, we have grown. So margin has gone impacted Rohan, who is the CEO of Nature Bio he will explain more. So over to you.

Happy to answer that. 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 6 months or H1, we had to move a lot of our operations to third party, given that we were expanding 2, 3x of our capacities what we had before. And to make that possible in the 6 months period, we had to move our operations to third party. That has made us spend some extra cost, which has impacted our margins as one of the component of why our margins reduced. On the revenue side, I think if you see, you said it has not grown sequentially, but it has. So revenue-wise, we are seeing a good growth already from the last half year of last year. So there, we don't see anything. I think it's a correction that once you will read it again. On the margin side, again, also, we, as you know, organic business does a lot of business in the non-Basmati segment. And non-Basmati globally, its prices are under pressure, partly because what India banned non-Basmati rice and just non-Basmati as a category I'm mentioning. And given that there were more surplus inventory of non-Basmati and a higher production that the numbers have stated now. So this has given a high pressure on the prices globally. And because of that, we had to sell at the market prices for something which we harvested at a higher price at that time. So that has also been shown in our margin structure that we had to have pressures on our margin. But this will all be covered up in the coming quarters.

Yes. Okay. What I meant was revenue growth sequentially. So sequentially, based on the numbers of H1 and last Q1, I concluded that there was no revenue...

Correct Amit, You are right, on quarter to quarter, the revenue side remains more or less the same, but what Rohan is saying is of the 6 months. So you need to compare the 6 months. So there is a growth of almost 26% that is coming in the 6 months. Yes, the margins have as Rohan explained, [Indiscernible] coming...

Got it. There is a purchase of stock in trade, there's a jump in that. Is that something to do with some bulk orders...

Not really. This is basically on account of the GF and Golden Star getting consolidated. It is more of a trading so we are getting it from our suppliers in Thailand. So it was not there last year. So now it is getting consolidated, there's more of that.

And same is the reason for reduction in other income as well, correct?

Correct. Correct. So there was income from the GF that was sitting in the last year. So that has now been consolidated.

Okay. And last one, this Thailand importing -- I mean U.S. importing from Thailand, Golden Star. So that also is around 19% tariff that has been passed on to the customer?

Yes.

The next question is from the line of Nitin Shakdher from Green Capital Single Family Office.

This is Nitin Shakdher from the Green Capital Single Family Office. My question to the management is more from as an investor rather than an analyst. What is the company's thought process in terms of a larger brand strategy to become a larger food and beverage company maybe in the next few years in terms of brand expansions, let's say, like yogurt-based drinks, lassi, butter milk, lemonade, sharbet, which go very well with rice, on the same lines the way you've done with Thai Green Curry Rice and processed foods venture. Is there a thought process on the strategy to become a larger company rather than just a rice brand?

So good question. As a brand, Daawat is a very strong brand in India and globally. And then Royal is a very strong brand in North America. So we have in our 5-year plan, how to do the extension in this brand and what portfolio we can extend, where we have a better right to win as a growth opportunity. We have a good plan, as we are giving the guidance on our 5-year plan. [Indiscernible] This is what we do every 5 years. That's all part of that. So as far as rice company, we are very proud and very happy to be a Specialty Basmati Rice company. And the category is growing year-on-year 5% to 7%. It's a healthy business. And so we have a plan to grow In Specialty Thai Rice as well as..[Phone ringing] is it okay

I have another question, it is just if you could talk us through the European process investment [Indiscernible] with Global Green, [Indiscernible] how is that shaping up? I know it's still issue right now, but what's generally the ramp and how is it going to be processed what's the initial that?

Yes. So we have signed SHA [Indiscernible]. So now we are waiting for the approval from the Hungary government. And then once approval is there, then the transaction will be considered.

[Operator Instructions] The next question is from the line of Hitesh Goel from [Indiscernible] Capital.

Can you tell me what is the volume growth in U.S. in FY '26 and in India?

[Indiscernible] [Please check with us offline]

And in terms of input cost, input cost shaped up on a Q-on-Q basis? Has there been a reduction or it has been flat?

I think the gross margin has improved, so as far as input cost is concerned, I'm sure you know that we, in a year's time, 80% of the crop, 70% of the crop we source in the month from October to February. So it doesn't really vary Q-o-Q, it is Y-o-Y. So our gross margin has improved. So that impacts both the pricing power as well

My final question on Middle East market, there has been decline, right? I mean you are a very small player right now in Middle East market. Still we are seeing a decline. So can you talk about what is the strategy on the Middle East side, the biggest market in Basmati right?

[Indiscernible] So it is not a decline. If you look at first quarter numbers, there was a decline of almost 33%. So this decline has now been in the quarter-on-quarter basis, we have improved. So yes, the first quarter was slightly sluggish in this regard, but we are improving and we have gained quite a reasonable share in that loss in the sales which was there in the second quarter itself.

[Indiscernible] As far as Middle East is very big, and it is one of our focus market. So we have started from kind of greenfield. 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 5 years, we will be able to build a sizable business in the Middle East.

The next question is from the line of Ishant Lalwani from Ashika Institutional Equity.

Our PAT margins were trending downwards from the past 7 to 8 quarters. And earlier, it was around 8%. Now it was around 6%. So can you just throw some light on this and your future outlook on the PAT margin?

So Sachin will explain more, but if you see our ROCE has started the impact of the mix, it is growing, adding Jasmine rice business where absolute margin in percentage may be lower, but in terms of ROCE it is fine. So if you see our ROCE has grown to, Sachin correct me if I’m wrong, is around 22%.

If you look at the PAT numbers this quarter, half-yearly, it is 6.3%, last year it was 7.2%, but this [Indiscernible]. There was certainly the tariff which we passed on. There was incremental revenue, [Indiscernible] [Technical Difficulty]. Our growth in the PAT margins in Y-o-Y basis it is almost 8.7% and the growth which we have

That is the resultant of investment in the bank, digital, all these investments, if you see the gross margins are increasing.

The next question is from the line of from Raman KV from Sequent Investments.

I just want to understand [Indiscernible] with respect to the RTC the margin declined because you had [Indiscernible] additional cost as to third party manufacture.

No, no, no. the margin decline is [Indiscernible] on account of [Indiscernible] certain kind of promotions and planned investments which we have done in , so there is incremental brand investments which was done in RTC and RTH segment to accelerate the same.

And we did third-party manufacturing for [Indiscernible] Am I audible? Can you hear me [Break] [Technical Difficulty]

[Operator Instructions] The next question is from the line of Rajesh Agarwal from Moneyore.

The ability of crop because of the rains Basmati crop showing, acreage has increased by 1.5%. So if we need to grow by double digit, the crops will be available for the next year?

That's a good question, Rajesh. As explained that the crop size is 1.5%. But as LT Foods, we contribute only of the total crop 7% to 8%. So enough crop available as far as LT Foods is concerned to grow cyclical some year, it grow by more than the demand and then the carryover close. This is how the typically cycle goes, sometimes more sometimes at par and then the prices will be a little bit firm up and again, the growth will come.

So availability won't be a problem for the next year?

No.

Okay. And second, sir, your outlook on the tariff, how much can be passed on? How much has been passed on? So how much either we have to take or...

We are in the process. I think the next 2 months will tell us the impact of this, but we are in the process.

But nothing has come in this quarter, no? Because we had a...

Initially when there was a 10% duty, that we have taken partly price increase. Yes. 25 then again 25

Yes. Stocks are available there now still for the Christmas season?

Yes, fully available... We are very well presented on the shelf.

[Operator Instructions] The next question is from the line of K.P. Rao, an individual investor.

[Indiscernible] There is maximum improvement in revenue our operational profit, that did not get converted into PAT. There was another question on this, but I did not fully understand. What are the top reasons for non [Indiscernible].

There are two or three reasons. We are investing in our brand as a percentage to revenue has increased. Likewise, we are investing in our digital initiatives and making future organ. So that kind of investment as a percentage to the revenue has increased in this half year. Likewise because earlier the Golden Star, the share of profit was there. There was no revenue at such a time. So my overall profit, the share of profit used to reflect directly to my PAT numbers and getting a better return ratios. Now this year with the consolidation of the Golden Star, the overall revenue and size of the business is getting consolidated. So yes, we have grown, but at the same time, there are certain reasons associated with the PAT not following the growth of the revenue.

The next question is from the line of Prashant, an individual investor.

Yes. I have a simple question. If you look at the balance sheet as of 30th September, you have cash and bank balances of around INR 600-plus crores. And also you have short-term borrowings of around INR 1,200 crores, INR 1,100 crores something INR 1,200 crores. Now this looks like dichotomy and we have an interest of around INR 50-plus crores for the half year. So why should we, why should the company pay interest on short-term borrowings when it has cash of INR 600-plus crores?

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 is foreign companies. We can't have because 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 global operations.

So India, we are cash surplus. internationally, we have a borrowing, so that's what Sachin wanted to explain, we can't transfer we are getting better returns than what we are paying.

Is in line with what kind of interest we are paying. So we are kind of overall percentage of the ratio [Indiscernible]...

Okay. And if we take the borrowing short borrowings, I mean what would be the blended cost borrowing?

It depends on the [Indiscernible] rupee value around 7%. That includes [Indiscernible]

The next question is from the line of from Meet Jain from Motilal Oswal

My question is on the Basmati segment. In the domestic market we have seen a [Indiscernible] certain kind of growth, so, how do you look at the second half of FY '26 in terms of the overall outlook in the domestic market we have seen a very good production as well as[Indiscernible] impacted. So how is the overall demand scenario for domestic market?

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

The second part. The first part was how it's going to, the second half would be second half guidance.

Yes. Second half, as you know, in America, there is a little bit turbulence, although we are in the process of the price. But the next 2 months will tell the things, but we are reasonably optimistic about that. But rest business looks promising. India looks promising. Europe looks promising and rest of the world also looks promising. U.S. is -- we have to watch for the next 2 months. Rohan can explain more on the second half on the organic, but control. Yes, Rohan, please.

Yes. We have, as I shared with you a little while ago that we have made some investments there, which has given us a slight dip in the margin. On the revenue side, as you have seen, the half yearly has grown by 26% from previous years. We had to prepone some of the shipments given that, to the U.S., given that this duty was 10%, 25% and 50%. But we see that the business is sustainably growing and we would rebound in the second half of the year. And coming years on our strategies also, we are getting into the new private label channels here in Europe. And just not knowing about the U.S. fully today. But so far, the organic segment remains strong and sustainable, and we believe that we will rebound it to our last year's numbers by the end of the year.

And in terms of the margin, like will we see similar kind of margin organic for the next 2 quarters as well, the higher cost weighing on the margin or it was this quarter phenomenon in the organic segment?

It will take one more quarter to settle down. But by the end of the year, we believe that in the fourth quarter, we will be back with our margin structures that we have been enjoying for the past few years.

[Indiscernible] [Technical Difficulty] year has gone little delay. So, I'm sure in the next and then we will see growth. But as far as demand is concerned, that is growing. But we were not able to capture that demand because of our constraint in the production.

Okay. So, we can see a similar run rate in the next quarter as well. And from Q4, we can see the capacity ramping up from the quarter 4 . [Indiscernible]

Yes

Okay. And will there be certain impact on the EBITDA because we are guiding for around INR 300 crores to INR 400 crores EBITDA breakeven or EBITDA positive. So will . [Indiscernible] are we on line with this? Or can we expect this...

Yes, we are on line. [Indiscernible]

The next question is from the line of Rajveer Tandon from Ventura Securities.

What is the impact of the financial statements of the new acquisition. What is the deal structure and how is it being taken care?

The deal size is EUR 25 million, that’s the enterprise [Indiscernible] we have signed the SHA and so we will get an approval in coming 2, 3 months [Indiscernible]

Because you ask for the structure. So, after the approval it will become 100% acquired by [Indiscernible] It is a fellow subsidiary

Is it our own cash deal [Indiscernible] ?

Yes it is our own cash deal

So what is the value of the fixed assets and how much would be the intangibles and goodwill that will be coming into the balance sheet? That will come in the valuation.

Yes, the tangible will be around EUR 6-7 million at the start and remaining will be the APEX value.

The next question is from the line of Subhankar Ojha from SKS Capital.

So basically, regarding the acquisition, can you hear me? Regarding the acquisition only, so what has been the past couple of years trend of this entity? I mean we have mentioned that EUR 40 million was the last year revenue. How has it been growing? Or is it like I mean, last 2, 3 years, has this business been growing there?

Not really because they were having some financial constraints. So, they are not growing. But as far as category that is growing. And that is the kind of one of the all [Indiscernible] the resources in place to grow that business.

Okay. And is it a profitable one in terms of EBITDA level?

Yes, it is profitable.

All right. This is secondly, sir, so basically, this current 50% tariff, I mean you said that when the 10% was applicable, we passed on. So right now, as we speak, how much of the tariffs have we been able to pass on?

So we are in the process. 10% is whatever proportion we have already passed on. The rest 35% is still in negotiation.

The next question is from the line of Khushi Parekh from [Indiscernible] PMS.

The first question is India centric. How is the competition shaping when especially when it comes to modern trade [Indiscernible], because I believe the top two players in India have the dominant share in [Indiscernible], so how is the trend and how are we geared to compete in the segment?

The category is growing, Daawat is second largest brand we are growing at 30%. We are increasing our household and we are fully equipped from every aspect, from the sense of the brand, we are investing in higher brands, if you see ion H1 we have invested double money in advertising, we are getting the growth. We are very strong.

Any indication on the competition and intensity increasing or staying same or decreasing, because what I was hearing [Indiscernible] that some of the companies or all these players are looking to have some other set of brands as well, considering the dominant position that these few players have.

I have not understood your question exact. We are in a stronger place here I can say. We are extending our brand and we have a better right to win [Indiscernible]

From your overall strategy perspective [Indiscernible] what are the cut off 3 or 4 consideration we have when we are looking to enter into a new [Indiscernible] or we are acquiring a business, 2 or 3 odd players have been on the spree to acquire smaller businesses or getting into a new product category. What are the key considerations that we have and which are the top 2 considerations that we have.

As a company as a brand we have two strengths; one is Daawat as a brand and second we have distribution. So as a strategy we will grow around this. So, wherever you know there is a possibility we can leverage the equity of Daawat we will expand there [Indiscernible]. On the other [Indiscernible] side the distribution we will be evaluating, that is [Indiscernible] with our distribution. Daawat is a kitchen brand. So we will be around that if, that is the answer you're looking for.

Okay. So largely [Indiscernible] the distribution synergy that we are looking for and coming in the periphery where we are present.

Yes...

Ladies and gentlemen, that was the last question for today. I would now like to hand over the conference over to the management for closing comments.

Thank you, everyone. On behalf of the management of LT Foods Limited, we thank you all for joining us on our post earnings call today. We hope we have been able to address majority of your queries. You may reach out to me or our Investor Relations partner, Ernst & Young, for any further queries that you may have, and they would connect with you offline. So I would request the moderator now we can close the call. Thank you all.

Thank you. On behalf of LT Foods and Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.