From rice seller to global brand: Can LT Foods be the next long-term compounder?

Behind this shift is LT Foods. What began as a small rice trading business has grown into a global company with well-known brands across India, the US, Europe, and the Middle East.

While many still know LT Foods only for its rice, its stock has told a different story — delivering more than 1400% returns in the last five years, which works out to an impressive 72% CAGR.

So, the real question is: Can a simple, everyday food business like this keep growing and continue rewarding its investors? Let’s find out.

L T Foods Ltd Share Price Chart (Apr’ 20 till Apr’ 25)

Figure 1: Stock price movement of L T Foods Ltd. Source: Screener.in

A global business built on a simple grain

Rice is something most of us take for granted. But basmati rice? That’s a different story. It’s aromatic, long-grained, and premium. In many parts of the world, especially in Indian households, basmati isn’t just food, it’s tradition.

Figure 2: Company At A Glance. Source: L T Foods Dec 24 Report

India leads the world in growing and exporting this grain.

In FY23 alone, India exported about 4.5 million metric tonnes of basmati rice, amounting to nearly $6 billion. And it wasn’t just about quantity, as the total value jumped by 22% compared to the previous year. That tells you how much the world is willing to pay for quality basmati.

And the story back home is just as interesting.

Until a decade ago, most people in India bought rice in sacks, the old-fashioned way, from local stores. But that’s changing fast. In FY15, only about a quarter of basmati sales in India came from branded products. By FY23, that number was close to 42%. More and more families are choosing trusted, packaged brands. It’s the same shift we saw with salt, flour, and even cooking oil.

LT Foods saw it coming and moved early

This is where LT Foods stepped in. The company started with the rice trade decades ago. But instead of just buying and selling rice, they made a smart move – they built brands.

Daawat is now one of the most recognisable basmati brands in Indian kitchens, with around 30% share of the branded market. But LT Foods didn’t stop at India.

In sells its rice the US, Canada, and the Middle East. After a few tough years, they’ve bounced back with over 25% revenue growth in FY24.

Figure 3: Geographic Market Share. Source: L T Foods Dec 24 Report

What’s even more striking is that nearly 70% of LT Foods’ revenue now comes from outside India. This is no longer just an Indian rice exporter; it’s a global consumer food company.

Figure 4: Geographic Revenue Share. Source: L T Foods Dec 24 Report

More than just basmati

LT Foods is expanding into other fast-growing categories that fit what today’s consumers want — health, convenience, and variety.

Take organic food. Through its arm, Nature Bio Foods, the company works with over 60,000 organic farmers to produce everything – from rice and pulses to spices and soy.

Organic now makes up 11% of the total revenue. And they’re serious about it – so much so that they’re setting up a facility in Uganda to serve export markets like the US more efficiently.

Figure 5: Segments Revenue Share. Source: L T Foods Dec 24 Report

Then there’s Golden Star, a company LT Foods acquired in 2022. This US-based brand sells jasmine rice, which is actually three times bigger than basmati in America. That acquisition instantly expanded LT Foods’ reach beyond the Indian diaspora to a broader consumer base.

They’re also getting into ready-to-cook and ready-to-heat meals. Think microwaveable rice bowls and quick brown rice. It’s still a small piece, around 3% of revenue, but it’s growing fast. Management expects this category to cross 10% in a few years.

Figure 6: Management Commentary on RTE and RTC Segment. Source:Concall Dec 24

This kind of product diversification matters. It helps them grow margins, reduce dependence on raw rice prices, and build deeper connections with consumers. It also sets them up to behave more like an FMCG company than a commodity business.

What sets LT Foods apart

Several companies sell rice. Many of them are large, some are even global. So, what makes LT Foods different? What’s the edge that has helped it stand out, not just on supermarket shelves but also in its financial performance?

It starts with the brands. In a category where much of the product is still sold loose or with minimal branding, LT Foods has built names that people recognise and trust. Daawat in India and Royal in the US are more than just labels —they represent consistent quality, wide availability, and a level of assurance. This brand equity gives LT Foods pricing power.

Next is the control LT Foods has over its supply chain. It doesn’t just buy rice from the open market and package it. The company works directly with more than 65,000 farmers, runs its processing facilities, manages packaging, and even controls distribution in many markets. This end-to-end approach means better quality control, better cost visibility, and fewer surprises. It also means the company can respond quickly to shifts in demand or supply issues — something that’s become more important than ever in the post-COVID world.

Then, there’s the global footprint. LT Foods is present in over 80 countries, but it doesn’t take a one-size-fits-all approach. In the US, it sells under the Royal and Golden Star brands, each catering to a different consumer segment. In Canada, it leads with 817 Elephant. In Europe, it operates a processing plant in the Netherlands to supply regional demand efficiently. In the Middle East, it has adapted its strategy through regional partnerships. This localised execution ensures relevance in every market, which is far more powerful than simply exporting the same product everywhere.

And finally, there’s a layer of discipline that runs through how the company operates — from how it manages its business mix to how it allocates capital. But we’ll get into that in the next section.

Financial performance: Growth with stronger fundamentals

LT Foods has quietly transformed from a thin-margin commodity business into a more robust consumer-facing company with better profitability, tighter capital allocation, and consistent growth.

Revenue: Scaling with better quality

Between FY19 and FY24, LT Foods nearly doubled its revenue from Rs 3,890 crore to Rs 7,722 crore, growing at a 15% CAGR.

But this isn’t just a story of selling more rice, it’s about selling better rice. The share of branded and value-added products increased from ~70% to ~78%, while international markets now contribute 66% of revenue, up from 60% five years ago. These structural changes in the business mix have driven both growth and stability.

Margins and profitability: A clear uptrend

Rising brand salience, scale, and a shift to higher-margin products helped the company expand its EBITDA margin from 10.7% in FY22 to 12.6% in FY24. Gross margins have remained strong at around 32–33%, supported by direct farmer linkages, inventory controls, and premium pricing in export markets.

In FY24, PAT rose 47% year-on-year to Rs 593 crore, with net profit margin at 7.6%. Earnings per share (EPS) have grown from Rs 7.3 in FY22 to Rs 17.2 in FY24. Analysts expect ~20% EPS growth annually over the next three years, led by growth in branded rice, organic, jasmine, and ready-to-eat segments.

Capital efficiency and cash flow: Quiet strength

In FY24, LT Foods posted a Return on Equity (ROE) of ~19% and a Return on Capital Employed (ROCE) of ~16% —approaching the lower end of FMCG benchmarks. Importantly, it achieved this while reducing its net debt-to-equity from 2.3x in FY17 to just 0.2x now. Free cash flows have kept pace, with the company generating Rs 1,760 crore in cumulative FCF between FY19–24, nearly 81% of its Earnings before interest, depreciation and amortisation (EBITDA).

This cash strength has funded expansions like its US RTH facility, the Uganda organic plant, and the Golden Star acquisition — all without taking on excess debt or diluting equity.

Valuation: What’s next for investors?

After delivering over 1,400% stock returns in five years (72% CAGR), the natural question is – what now?

As of FY24, LT Foods trades at a P/E of ~21x trailing earnings. That’s a sharp re-rating from the 8–10x levels it once traded at, but not unreasonable given:

● Its strong branded mix,

● Improving margins and earnings visibility,

● And near debt-free status with rising return ratios.

By comparison, Indian FMCG peers often trade at 30–50x earnings despite slower growth. LT Foods still carries some “commodity” perception, but as it continues premiumising, the gap could narrow.

If EPS grows to Rs 27–30 in the next 3-4 years, and the stock maintains a 20x multiple, investors could see the price move to Rs 540–600, offering a 15–20% CAGR from current levels.

Note: This is not a prediction of where the stock price could head. It’s just an if-then calculation for academic purposes.

This won’t be the kind of explosive return we’ve seen in the past, but it could still be a solid compounder, driven by earnings, not just valuation re-rating.

For investors, LT Foods now looks more like a consumer business than a rice exporter. The real opportunity lies in staying with the story as it deepens its presence in ready-to-eat, organic, and jasmine segments, scales globally, and pushes margins higher.

In a market often obsessed with the next big trend, LT Foods is quietly showing what disciplined execution in a simple, essential category can deliver—steadily, patiently, and profitably.

Note: We have relied on data from the annual report and industry reports for this article. For forecasting, we have used our assumptions.

Parth Parikh has over a decade of experience in finance and research, and he currently heads the growth and content vertical at Finsire. He has a keen interest in Indian and global stocks and holds an FRM Charter along with an MBA in Finance from Narsee Monjee Institute of Management Studies. Previously, he has held research positions at various companies.

Disclosure: The writer and his dependents do not hold the stocks discussed in this article.

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