LT Foods Ltd (LTFOODS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to Q2 and H1 FY '27 LT Foods earnings call. As a reminder, all participant lines will be in the listen-only mode,
Moderator: ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumanth Kumar from Motilal Oswal. Thank you and over to you, sir.
Sumanth Kumar (Motilal Oswal Financial Services): Thank you. Good evening, everyone, and very warm welcome to LT Food Q2 FY '27 post result earnings call hosted by Motilal Oswal Financial Services. On the call today, we have management team being represented by Mr. Ashwani Kumar Arora, MD & CEO, Mr. Sachin Gupta, CFO and, CFO, and Ms. Monika Chawla Jaggia, chief corporate and development officer. We'll begin the call with the key thoughts from the management team. Thereafter, we will open the floor for the Q&A session. I would now like to request the management to share their perspectives on the performance of the company. Thank you, and over to you.
Monika Chawla Jaggia (LT Foods Ltd): Thank you, Sumanth, for the introduction. Along with us, we have Mr. Ritesh Arora as well, who is the CEO of India and Far East business. So, good evening, everyone, and thank you for joining us today on the post Q2 and H1 financial year '27 earnings conference call of LT Foods Limited. Before we begin, I would like to remind you that certain statements made during this call may constitute forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. The result documents are available on our company's website as well as the stock exchanges. So, I'll start with, brief strategic update across our key geographies and businesses. Across markets, our priorities remain consistent: strengthen our brands, expand consumer reach, build differentiated portfolio, deepen distribution, and investment in capabilities that support sustainable and profitable growth. I'll start with India. India continues to be a strong growth engine for LT Foods. Our strategy is centered on premiumization, portfolio expansion, deeper distribution, and digitally enabled execution. During the quarter, we strengthened our portfolio with Daawat Delight, Rozana Platinum, and new formats such as Biryani Gravy and Biryani Masala. We are also seeing encouraging traction in health-focused offerings, including brown, red, and black rice, while our biryani kits have grown by 38% during the first half. Our brand investments are translating into measurable outcomes. Against category growth of approximately 1.3%, our branded portfolio grew by nearly around nearly 8%, supporting a 140 basis point increase in market share on year to date basis. Household reach increased from 56.2 lakh to 67.5 lakh over the last year. Through our, Project Vistaar, we are increasing direct distribution, feet-on-street capability, and assortment productivity. Alongside this, investments in supply chain and sales digitalization are improving forecasting, frontline execution, and on-shelf availability. With the branded basmati still significantly underpenetrated in India, we see a long runway to acquire consumers, premiumize the category, and expand into adjacent consumption occasions. Now, I'll cover the United States. That United States remains our largest international market and an important growth engine supported by strong brand, category leadership, and established omnichannel presence, and strong distribution. We continue to strengthen our core rice portfolio while expanding into convenience-led and value-added consumption occasions. During the period, we advanced our ready-to-heat portfolio, expanding microwaveable format formats and continued premiumization across Royal and Golden Star in rice. We are also investing in digital commerce and consumer discovery capabilities to keep our brands visible and relevant as the path to purchase increasingly moves across digital and AI-enabled platforms. Our ambition is to leverage our leadership into rice to build a broader branded foods platform in North America. If I talk about Europe, Europe continues to be an important strategic market for us. While the operating environment remains challenging, we have made meaningful progress in strengthening the underlying business and creating a more scalable platform for the future growth. During the quarter, we further expanded our customer base and secured new mainstream private label business across Germany and the Nordic Nordic markets. We have strengthened our
Monika Chawla Jaggia (LT Foods Ltd): as in France and are expanding our commercial coverage across Europe. Together these initiatives are increasing our participation across both mainstream and ethnic channels, and substantially broadening the opportunity available to us. At the same time, we remain sharply focused on improving the quality of the business through better product and channel mix, procurement efficiencies, automation, productivity improvement and the disciplined cost management. Our strategy from here is very clear. Scale the mainstream business, deepen our presence across key European market, strengthen higher-margin opportunities, and continue improving the efficiency of our operating model, and keep growing and further strengthening the Daawat brand in ethnic market. Overall, Europe remain in a, remains in a investment and scale building phase, but the business today is on a stronger footing than it was few quarters ago. We have expanded our customer base, strengthened our commercial organization and improved organized, operating performance. Our focus now is on translating these gains into sustainable growth and progressively stronger profitability over the medium term. Middle East continues to be an attractive long-term growth opportunity for LT Foods despite being a highly competitive and fragmented market. During the period, the region delivered strong volume growth outperforming both last year and inter Growth was supported by deeper market penetration, expansion of private label partnerships and continued strengthening of our core branded portfolio. We also continued investing behind brand building and consumer awareness, helping strengthen brand equity and expand our consumer franchise across the region. While the overall demand in the region remained strong, the quarter was significantly impacted by the supply disruptions, which constrained inventory flow into the region, and a sharp escalation in the freight cost further raised the landed cost and weighed heavily on the profitability during this period. While we have taken active steps to mitigate these pressures through alternate routing, optimizing spends, and increased pricing, the full impact of these will show up in the subsequent quarters. Though still, we continued the momentum in our e-commerce business, where we maintained category leadership position and delivered strong growth despite the intermittent supply chain disruptions. Looking ahead, our strategy remained focused on expanding distribution, improving product availability, strengthening local partnership, and increasing penetration across both branded and private label opportunities. We believe these initiatives will further strengthen our position in the region over time. Rest of the World: In Rest of the World markets, we continue to enjoy leadership position across several markets. Through focused brand investments, strong execution, and continued distribution expansion, we are further strengthening our market share and consolidating our leadership position across these geographies. If I talk about Nature Bio Foods, it is undergoing an important strategic transformation from an India centric source, sourcing and export business into a globally integrated consumer-focused organic food platform. The first pillar is moving closer to customers through deeper direct relationship with retailer and consumer brands. This transition has created near-term revenue pressure as parts of the traditional intermediary-led business are replaced, but it should improve customer ownership and value chain participation over time. The second pillar is portfolio and sourcing diversification. We are expanding beyond rice and developing sourcing capabilities across different geographies like Turkey and other regions. Together with our European processing capability, this strengthens supply chain flexibility and enables a broader organic portfolio. In India, we are consolidating manufacturing through a new Madhya Pradesh facility with the first phase expect, expected to commence operations in this financial year. This transition involves near-term cost, but should structurally improve efficiency, resource utilization and cost competitiveness. Our further investment in Leev also provides an entry into Benelux organic retail market, particularly in breakfast and between-meal snacking and creates an additional platform for downstream growth. Overall, Nature Bio Foods, the organic arm of LT Foods, is moving from an origin-led organic ingredient model towards a globally sourced destination-focused organic food platform with deeper customer relationship and greater participation in the downstream value chain. To summarize, across geographies and segments, our strategic direction remains clear. Defend and deepen leadership in the core, broaden participation in convenience and value-added foods, strengthen consumer brands, improve the quality and profitability of international operations and invest in digital and operational capabilities that support long-term scale. India continues to deliver strong profitable growth. North America provides the platform to extend beyond rice. Europe and UK are progressing through disciplined
Monika Chawla Jaggia (LT Foods Ltd): and the Middle East is building consumer scale and Nature Bio Foods is being repositioned for high quality growth. Together these prioritised support priorities support our evolution into a larger more diversified globally relevant branded food company. Now with this I'll hand over to Sachin, CFO of the company for the detailed financial update. Over to you, Sachin please.
Sachin Gupta (LT Foods Ltd): Thank you Monika. Good evening everyone and thank you for joining us today. I'm pleased to share our financial performance for the second quarter and first half of FY27. The first half delivered healthy broad-based growth across all key geographies led by different segments even as we stepped up our investments behind our brand and maintained our focus on operational efficiency and disciplined capital allocation. Now let me begin with our consolidated financial performance. During Q Q2 FY27 the consolidated revenue grew by 17% on year-on-year basis to 3,253 crores from 2,772 crores in quarter two FY26, a growth of 3% over quarter one FY27. The gross profit increased by 12% to 1,058 crores from 948 crores. The gross margin for the quarter was 32.5 5% compared with 34.2% in quarter two FY26. The change in the gross margin was primarily due to two factors. Firstly, the change in the shipment terms with the related party from CIF to FOB basis, under which the freight cost now forms part of the cost of goods sold instead of other expenditure. This classification is EBITDA neutral. Secondly, the higher shipment cost across the major markets, shipping cost as a percentage to revenue rose by almost 40 basis points which also has an impact on the EBITDA. EBITDA grew by 13% to 358 crores from 316 crores in quarter two FY26 and and was marginally lower than 363 crores in quarter one FY27. EBITDA margin stood at 11% compared with 11.4% in quarter two FY26 and 11.5% in quarter one FY27. This moderation reflects the reflects the gross margin factor which I just explained and a planned up step-up investment in the advertisement to support our brand and the new launches. Advertisement investment increased by 25 crores over quarter one, or 2.5% of the revenue as against 1.8% in quarter one, a jump of almost 70 basis points. We also continue to invest in building our health and convenience portfolio ahead of the commissioning of RTH facility in the US, which weighed on our quarterly margins. Meanwhile, the organic food segment improved sequentially with EBITDA of 22 crores against 10 crores in quarter one of this year. Depreciation increased with the capitalisation of new assets while the finance cost was higher on the year-on-year basis on higher supplier funding arrangements undertaken to optimize the working capital cycle. PAT increased by 10% on year-on-year basis to 180 crores from 164 crores. For FY For first half FY 27, the consolidated revenue grew by 22% to 6,414 crores from 5,273 crores in last year's FY26. On normalized basis, after adjusting the Golden Star which was not fully consolidated in in quarter one FY26, the revenue grew by 18%. The gross profit increased by 15% to 2,087 crores. EBITDA grew by 17% to 721 crores and the PAT grew by 9% to 364 crores from 332 crores in H1 FY26. EBITDA margin in this half year stood at 11.2% compared to 11.7% in last year primarily reflecting higher shipment cost and increased brand investments. Brand investments in this in this half rose by almost 29% to 139 crores. Even as we continue to invest in our brands and future growth platforms, we remain focused on driving operating leverage and efficiencies across the value chain. Now, to
Sachin Gupta (LT Foods Ltd): on our segment performance. Our Basmati and the Specialty Rice business continued to lead our growth. In first half of this year, the revenue increased by 27% to 5,764 crores from 4,552 crores, with volume increase of 11% on year-on-year basis. The segment contributed 90% of the consolidated revenue. The gross margin in this segment was at 33%, while the EBITDA margin was at 12%. The EBITDA margin in the matured market like India, US and the rest of the world stood at 15%. On the geographical front, India grew by 24% on a year-on-year basis, with volumes increasing by 10% and this India and India accounted for 29% of the revenue. On the international business continues to provide significant scale and diversification. North America, which contributed 50% of our revenue, grew by 21% on a year-on-year basis, or 13% on normalized basis after adjusting Golden Star. Middle East and the rest of the world grew by 25% and contributed 9% of the revenue. Europe contributed 12% of the consolidated revenue during the period. The operating environment in the Europe remained challenging, particularly due to the raw material and the freight cost pressure. Even so, the European business reduced the debt by 1.8 million euros and the improved working capital during the first half. In the UK, performance was impacted by the lower than planned mainstream and industrial volume, and elevated operating cost. Price recovery initiatives are expected to help offsetting freight and logistic inflation, and the business remains focused on improving volumes, inventory management and operating efficiencies. Now, coming to the Organic and the Ingredient business. The revenue in this segment was 520 crores in H1 FY '27, compared to 583 crores in the last half year, reflecting the ongoing remodeling of the business. The gross margin held at 34% and EBITDA margin was at 6%. Encouragingly, the segment improved sequentially in quarter two, and we continue to work on the improving the business mix and operating performance. On Health and Convenience portfolio, comprising of ready-to-heat, ready-to-eat and ready-to-cook products, this segment contributed 102 crores in this half year, up by 8% from 95 crores last year, even before the enhanced RTH capacity has become operational. Ready-to-eat grew by 17% on a year-on-year basis, ready-to-cook grew by 28%, and the ready-to-heat grew by 7% in the rupee terms. We continue to invest in the category, with a long-term perspective. Now, coming to the balance sheet and capital efficiencies, where we have made a meaningful progress, inventory days reduced to 159 days from 187 days in the last, last half year. With the trade payable days reduced to 26 days from 29 days. As a result of the working capital, these improvements significantly to 143 days from 174 days in the last year. We, we ended this half year with a net cash position of 247 crores in our balance sheet. Our return on capital employed improved to 22.4% from 22% in the last year. Return on equity was at, at 15.7% and the interest coverage stood at comfortable 13.8 times. Improving working capital and capital efficiency remains priority, as we continue to invest in a brand capacity, distribution, and new growth opportunities. Now, coming to the stand-alone performance. For this half year, the revenue in the stand-alone basis grew by 14% to 2,417 crores from 2,119 crores. EBITDA increased by 34% to 223 crores, with EBITDA margin improving by to 9.2% from 7.9% and the PBT also grew by 28% to 173 crores. PAT grew by 24% to 134 crores from 108 crores.
Sachin Gupta (LT Foods Ltd): by 17% on a year-on-year basis to 1,241 crores. And the EBITDA rose by rose to 103 crores from 101 crores in Q2 with the margin moderating to 8.3% due to higher other expenditures, including the brand investments. The standalone balance sheet remains net cash positive as of September '26. Now, to summarize. The first half of FY '27 reflected the continued scale up of our businesses. More importantly, we have delivered this growth alongside alongside a meaningful improvement in the working capital and higher return on capital employed. Going forward, our financial priorities remain clear: Sustaining profitable growth in our core basmati and specialty rice business, improving profitability in the organic food business, scaling up our convenience food portfolio, driving efficiencies across the value chain, and maintaining discipline across the working capital and capital allocation. These priorities are anchored in our strategies of strengthening the core, expanding distribution and our product portfolio, driving premiumization, and building efficiencies across the value chain. With this, I request the operator to open the floor for questions.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: The first question is from Bhavi Chauhan from KRChoksey PMS. Please go ahead.
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