LT Foods: PAT growth of 54% & Revenue growth of 11% in 9M-24 at PE of 12
Guidance for 10-12% CAGR till FY25 with margin expansion. 9M-24 performance in line with guidance. At reasonable PE valuations and attractive cash flow yield.
1. Selling Basmati & other rice with other food products
ltgroup.in | NSE : LTFOODS
Basmati Rice: According to AC Nielsen, our market share in India has surged by 160 basis points to 30.2%, while the market share in the Americas has witnessed a growth of 1.6%
2. FY19-23: Strong PAT growth even though revenue growth has been tepid
3. Strong FY23: PAT up 37% and Revenue up 28% YoY
4. Strong H1-24: PAT up 55% & Revenue up 13% YoY
5. Strong Q3-24: PAT up 52% & Revenue up 9% YoY
6. Strong 9M-24: PAT up 54% & Revenue up 11% YoY
7. Business metrics: Solid return ratios
The Return on Capital Employed improved to 20.3% in 9M FY’24 compared to 16.2% in 9M FY’23.
The Return on Equity improved to 18.7% for 9M FY’24 compared to 16.9% in 9M FY’23.
8. Outlook: 10+revenue growth in FY24 with PAT growing faster than revenue
i. FY24: Double digit growth
Management is guiding for a double digit revenue growth in FY24 which is in-line with the 9M-24 growth of 11% and also in line with the 10-12% revenue CAGR till FY25.
double digit growth
ii. Bottom line to grow faster than top-line on account of margin expansion
9. PAT growth of 54% & Revenue growth of 11% in H1-24 at a PE of 12
10. So Wait and Watch
If one holds the stock then one may continue holding on to LTFOODS
Coverage of LTFOODS was initiated after Q2-24 results. The investment thesis has not changed after a strong Q3-24. The delivery of a strong 9M-24 has increased confidence in the management to deliver a stronger FY24 compared to FY23
LTFOODS has a solid track record of growing its bottom line (30%+ CAGR for last 5 years) even though top-line growth has been tepid (15%+ CAGR for last 5 years). The trend is expected to continue with management guiding for a 5 year revenue CAGR of 10-12% with with EBIDTA margin expansion over the 5 years.
11. Or, join the ride
If I am looking to enter LTFOODS then
LTFOODS has delivered PAT growth of 54% & Revenue growth of 11% in 9M-24 at a PE of 12 which makes valuations reasonable.
LTFOODS is trading at market cap of Rs 6,827 cr which is less than the FY24 expected revenue of around Rs 7500 cr
LTFOODS delivered Rs 380 cr of free cash flow against a market cap of Rs 6,827 cr. As of 9M-24 end it is available on a free cash flow yield of 5.6% (not annualized) which makes the valuations quite attractive.
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