LT Foods Ltd. share price target

Subdued Quarterly and Full Year Operating Performance: LT Foods Limited has posted subdued set of consolidated numbers for Q4FY19wherein its revenue at Rs. 10087 Mn (as against our estimate of Rs. 12700...

For Q3FY19, LT Foods Ltd (LTFLs) revenue grew 21% YoY largely driven by pick up in branded consumer business and better realization both in India (+2%) and international (+8%) market. In Q3FY19, branded business (both domestic and international combined) saw a growth of 2% YoY driven by better realization in international branded segment (up 8% YoY). Organic segment de-grew by 12% YoY in value terms largely on account of consolidation. For Q3FY19, growth was triggered by India unbranded segment and other value added products which together grew by 63% YoY. Other Income Adj. PAT Adj. PAT Margin % Market share in India Basmati rice industry for the company stands at 29% while in USA it is 45% (Royal Brand). Branded business as % of overall sales up 100bps YoY for 9MFY19 to 69% from 68%. In Q3FY19, other income was down significantly on account of lower forex gains of INR50mn vs INR220mn gains for the corresponding quarter last year.

Mixed Q3FY19 - Impressive Top-line But Subdued Bottom-line: LT Foods Limited has posted good set of consolidated numbers for Q3FY19 wherein its revenue at Rs. 11139 Mn (against our estimate of Rs. 10028 Mn) registered growth of 21% on YoY basis. EBITDA at Rs. 1095 (against our estimate of Rs. 1003 Mn) grew at 27% on YoY basis. EBITDA margin at 10% met our estimate and expanded by 48 bps on YoY basis.

Moderate Quarter with Growth Momentum in Place: LT Foods Limited has posted a consolidated revenue of Rs. 9278 Mn in Q2FY19 registering a growth of 8.8% on YoY basis mainly on brand strength, higher realization and overall strong demand scenario for basmati rice.

For Q2FY19, LT Foods Ltd (LTFLs) revenue grew 8.8% YoY largely driven by pick up in organic business (up 18%). In Q2FY19, branded business saw a muted growth of 5% YoY which was largely impacted by decline in bulk branded business (25kg pack) in domestic market. However, organic business which had a muted Q1FY19 picked up again and grew 18% supporting the overall growth of the company. 1) India branded business lost the momentum temporarily and grew 5% for Q2FY19; 2) European business is expected to do a turnover of INR1.5bn in H2FY19 and is expected to break-even by the end of FY19. Management expects European business to turn profitable from FY20 onwards; 3) Branded business contribution to the overall revenue stands at 69%; 4) In Q2FY19, company secured an equity funding of INR1,400mn from Rabobanks India India Agri Business Fund II in its wholly owned subsidiary Nature Bio Foods Ltd. We have revised our earnings estimates downwards by 4.

Robust Showing at Branded Business Front: LT Foods Limited has posted strong performance on consolidated basis in Q1FY19 wherein revenue from operations stood at Rs. 8400 Mn, up by 11.7% but down by 9.0% against our revenue estimate of Rs. 9226 Mn on YoY basis.

Mixed quarter: For 1QFY19, LT Foods Ltd (LTFL's) revenue grew 11.7% YoY largely driven by branded basmati rice segment (up 18%). EBITDA declined 2.1% with margin contraction of 156bps to 11.1%. Benefit of Lower other expenses (-341bps) was offset by higher raw material (+532bps). Lower...

Mixed Performance: The company on a consolidated basis has registered mixed performance, wherein revenue for full year FY18 has grown by 11.4%, primarily driven by branded sales whose contribution in total sales has increased to 69% from 64% in FY17.

For 4QFY2018, LT Foods Ltd (LTFL) posted results in-line with our expectations on the top-line front. However it disappointed on the bottom-line front. Revenue grew by ~15% yoy to `1,071cr, driven by healthy growth in domestic as well as international businesses. On the operating front, margins contracted by 102bps yoy on account of inves..

T 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 eco Life (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 127bpsto 12.5%. We initiate coverage with a BUY rating valuing the stock at12x FY20E EPS of INR10.4 with target price of INR125