LT Foods Ltd (BOM:532783) Q2 FY25 Earnings Call Highlights: Revenue Growth and Margin Expansion Amidst Challenges

LT Foods Ltd (BOM:532783) reports a 7% revenue increase and gross margin expansion, despite facing profitability pressures in Q2 FY25.

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Oct 29, 2024
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  • Consolidated Revenue (H1 FY25): INR4,222 crores, up 12% from INR3,781 crores in H1 FY23.
  • Gross Profit (H1 FY25): INR1,428 crores; Gross Profit Margin expanded by 160 bps to 33.8%.
  • EBITDA (H1 FY25): INR514 crores, increased by 7%; EBITDA Margin decreased by 50 bps to 12.2%.
  • Profit After Tax (H1 FY25): INR306 crores, up 4% from INR295 crores last year.
  • Earnings Per Share (H1 FY25): INR8.71, increased by 3% from INR8.45 in H1 FY24.
  • Cash Profit (H1 FY25): INR393 crores, up 7% from INR366 crores last year.
  • Net Debt (H1 FY25): INR546 crores, reduced from INR569 crores in the previous half year.
  • Return on Capital Employed (H1 FY25): 20.8%, down from 21.6% in H1 FY24.
  • Return on Equity (H1 FY25): 17.1%, compared to 19.5% in H1 FY24.
  • Debt-to-Equity Ratio (H1 FY25): 0.2%.
  • Debt-to-EBITDA Ratio (H1 FY25): 0.8%, compared to 0.7% last year.
  • Current Ratio (H1 FY25): Improved to 2.5% from 2.4% in H1 FY24.
  • Net Working Capital Days (H1 FY25): 195 days, up from 174 days in H1 FY24.
  • Consolidated Revenue (Q2 FY25): INR2,134 crores, up 7% from INR1,992 crores last year.
  • Gross Profit (Q2 FY25): Increased by 17%; Gross Profit Margin up 320 bps to 34.1%.
  • EBITDA (Q2 FY25): INR256 crores, flat year-on-year; EBITDA Margin at 12%.
  • Profit Before Tax (Q2 FY25): INR199 crores, down 6% from INR211 crores last year.
  • Profit After Tax (Q2 FY25): INR151 crores, decreased by 4% from INR157 crores last year.
  • Earnings Per Share (Q2 FY25): INR4.3, decreased by 5% from INR4.5 in Q2 FY24.
  • Cash Profit (Q2 FY25): INR196 crores, up 1%.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • LT Foods Ltd (BOM:532783, Financial) reported a 12% increase in consolidated revenue for the first half of FY25, driven by strong sales in the Basmati, Specialty, and health segments.
  • Gross profit margin expanded by 160 basis points to 33.8%, indicating improved profitability.
  • The company achieved a 7% increase in EBITDA to INR514 crores, showcasing operational efficiency.
  • Net debt decreased to INR546 crores from INR569 crores, reflecting improved financial health.
  • The company is expanding its product portfolio by launching Jasmine rice globally, which has shown positive market reception.

Negative Points

  • EBITDA margin decreased by 50 basis points to 12.2%, partly due to increased freight costs.
  • Profit after tax grew by only 4%, indicating slower bottom-line growth compared to revenue.
  • Return on equity decreased to 17.1% from 19.5% in the previous year, suggesting reduced shareholder returns.
  • Inventory days increased to 195 days from 174, indicating potential inefficiencies in inventory management.
  • The company faced a 4% decrease in PAT for Q2 FY25, highlighting challenges in maintaining quarterly profitability.

Q & A Highlights

Q: Is the increase in other expenses mainly due to freight costs?
A: Yes, the increase is attributed to the Red Sea impact, which raised freight costs by 1.8% compared to last year, now accounting for 6.6% of revenue. (Ashwani Arora, CEO)

Q: How are current market prices affecting inventory valuation?
A: Inventory is valued at cost. The new crop is better, with prices down by 10-17%, which should improve margins in FY25-26. (Ashwani Arora, CEO)

Q: What is the reason for the increase in depreciation costs?
A: Depreciation increased due to capitalization of fixed assets, including the UK unit, which will be capitalized this quarter. (Sachin Gupta, CFO)

Q: Can you explain the gross margin expansion and future expectations?
A: Gross margins expanded due to a higher mix of premium and organic products. We aim to increase margins to 34-35% by focusing on brand spending. (Sachin Gupta, CFO)

Q: Are there any demand challenges in the basmati rice market?
A: No demand challenges are present. Growth is observed in all regions, including the USA, Middle East, and India. (Ashwani Arora, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.