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Motilal Oswal Report
L&T Foods Ltd. stands at a rare convergence of catalysts: the India-US trade deal slashing tariffs from 50% to 10%, the Ecopure CVD liability shrinking from Rs 163 crore to Rs 40 crore, and a CRISIL AA/Stable upgrade validating a decade of financial transformation.
While each catalyst independently moves the needle, together they present a structural re-rating opportunity.
Near-term headwinds from ~12% basmati paddy inflation are real but manageable. LT Foods' aged inventory model, premium export realisations, and disciplined working capital management provide sufficient buffers, as evidenced by gross margin expansion to 34% despite cost pressures in 9M FY26.
With revenue and PAT compounding at 16% and 27%, respectively, over FY20- 25 and double-digit growth guided for FY27, LT Foods has demonstrated strong financial resilience to turn macro adversity into a competitive advantage.
Key Risks:
Sustained basmati paddy inflation beyond crop 2025, escalating Middle East conflict disrupting shipping lanes and payment channels, reversal of India-US trade deal terms, adverse future CVD review outcomes for Ecopure, sharper-than-expected margin compression from rising freight costs and advertising spends, and INR/USD currency volatility amid global geopolitical uncertainty.
The brokerage expects LT Foods to report a compound annual growth rate of 17%/18%/18% in revenue/Ebnitda/PAT over FY25-28.
Motilal Oswal values LT Foods at 17x FY28E earnings per share to arrive at target price of Rs 500. Reiterate Buy.
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