Motilal Oswal initiates coverage on LT Foods, predicts 31% surge
LT Foods has a strong international presence in over 80 countries (69% revenue share in FY24), achieving a 17% CAGR in international revenue during FY19-24, a growth fueled by new geography expansion, innovative product launches, and brand acquisitions.
The company continues to dominate the US market (39% revenue share in FY24), leveraging its flagship Royal brand, which commands over 50% market share in packaged basmati rice.
“With a presence in key consuming regions, LTFOODS aims to enhance its market share through strategic marketing and distribution, particularly in the Middle East. Over the last five years, LTFOODS re-rated from 8x P/E (average of the last five years; one-year forward) to 21x (in FY25), fueled by strong cash flow generation (cumulative FCF of Rs 1,770 crore), consistent performance (36% PAT CAGR) due to product and geographical diversification, and improved RoE/RoCE (of 19%/16% in FY24),” said Motilal Oswal in its report.
The domestic brokerage firm also believes that transitioning from a commodity to an FMCG model, all factors position the company nearer to its FMCG peer valuation, estimating that LT Foods will record a revenue/EBITDA/adj. PAT CAGR of 14%/15%/19% over FY24-27.
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