Ladies and gentlemen, good day and welcome to Q2 and H1 FY 2027 LT Foods earnings call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumant Kumar from Motilal Oswal. Thank you, and over to you, sir.
Thank you. Good evening, everyone, and very warm welcome to LT Foods, to Q2 FY 2027 post-result earnings call hosted by Motilal Oswal Financial Services. On the call today, we have management team being represented by Mr. Ashwani Kumar Arora, MD and CEO; Mr. Sachin Gupta, CFO; and Ms. Monika Chawla Jaggia, Chief Corporate Development Officer. We will begin the call with the key thoughts from the management team. Thereafter, we will open the floor for the Q&A session. I would now like to request the management to share their perspective on the performance of the company. Thank you, and over to you.
Thank you, Sumant, for the introduction. Along with us, we have Mr. Ritesh Arora as well, who is the CEO of India and Far East business. Good evening, everyone, and thank you for joining us today on the post Q2 and H1 financial year 2027 earnings conference call of LT Foods Limited. Before we begin, I would like to remind you that certain statements made during this call may constitute forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. The result documents are available on our company’s website as well as the stock exchanges. I will start with a brief strategic update across our key geographies and businesses. Across markets, our priorities remain consistent.
Strengthen our brands, expand consumer reach, build differentiated portfolio, deepen distribution, and invest in capabilities that support sustainable and profitable growth. I will start with India. India continues to be a strong growth engine for LT Foods. Our strategy is centered on premiumization, portfolio expansion, deeper distribution, and digitally-enabled execution. During the quarter, we strengthened our portfolio with DAAWAT Delight, Rozana Platinum, and new formats such as biryani gravy and biryani masala. We are also seeing encouraging traction in health-focused offerings, including brown, red, and black rice, while our biryani kits have grown by 38% during the first half. Our brand investments are translating into measurable outcomes against category growth of approximately 1.3%. Our branded portfolio grew by nearly 8%, supporting a 140 basis point increase in market share on year-to-date basis. Household reach increased from 56.2 lakh to 67.5 lakh over the last year.
Through our Project Vistar, we are increasing direct distribution, feet-on-street capability, and assortment productivity. Alongside this, investments in supply chain and sales digitalization are improving forecasting, frontline execution, and on-shelf availability. With branded Basmati still significantly under-penetrated in India, we see a long runway to acquire consumers, premiumize the category, and expand into adjacent consumption occasions. Now I cover the U.S. The U.S. remains our largest international market and an important growth engine, supported by strong brands, category leadership, and established omni-channel presence and strong distribution. We continue to strengthen our core rice portfolio while expanding into convenience-led and value-added consumption occasions. During the period, we advanced our ready-to-heat portfolio, expanding microwavable formats and continued premiumization across Royal and Golden Star in rice.
We are also investing in digital commerce and consumer discovery capabilities to keep our brands visible and relevant as the path to purchase increasingly moves across digital and AI-enabled platforms. Our ambition is to leverage our leadership into rice to build a broader branded foods platform in North America. If I talk about Europe continues to be an important strategic market for us. While the operating environment remains challenging, we have made meaningful progress in strengthening the underlying business and creating a more scalable platform for future growth. During the quarter, we further expanded our customer base and secured new mainstream private label business across Germany and the Nordic markets. We have strengthened our presence in France and are expanding our commercial coverage across Europe. Together, these initiatives are increasing our participation across both mainstream and ethnic channels and substantially broadening the opportunity available to us.
At the same time, we remain sharply focused on improving the quality of the business through better product and channel mix, procurement efficiencies, automation, productivity improvement, and disciplined cost management. Our strategy from here is very clear. Scale the mainstream business, deepen our presence across key European markets, strengthen higher margin opportunities, and continue improving the efficiency of our operating model, and keep growing and further strengthening the DAAWAT brand in ethnic market. Overall, Europe remains in an investment and scale-building phase, but the business today is on a stronger footing than it was a few quarters ago. We have expanded our customer base, strengthened our commercial organization, and improved operating performance. Our focus now is on translating these gains into sustainable growth and progressively stronger profitability over the medium term.
Middle East continues to be an attractive long-term growth opportunity for LT Foods, despite being a highly competitive and segmented market. During the period, the region delivered strong volume growth, outperforming growth last year. Growth was supported by deeper market penetration, expansion of private label partnerships, and continued strengthening of our core branded portfolio. We also continued investing behind brand building consumer awareness, helping strengthen brand equity and expand our consumer franchise across the region. While the overall demand in the region remains strong, the quarter was significantly impacted by the supply disruptions, which constrained inventory flow into the region, and a sharp escalation in the freight cost further raised the landed cost and weighed heavily on the profitability during this period.
While we have taken active steps to mitigate these pressures through alternate routing, optimizing spend, and increased pricing, the full impact of these will show up in the subsequent quarters. Still, we continued the momentum in our e-commerce business, where we maintained category leadership position and delivered strong growth despite the intermittent supply chain disruptions. Looking ahead, our strategy remains focused on expanding distribution, improving product availability, strengthening local partnerships, and increasing penetration across both branded and private label opportunities. We believe these initiatives will further strengthen our position in the region over time. In rest of the world markets, we continue to enjoy a leadership position across several markets through focused brand investments, strong execution, and continued distribution expansion. We are further strengthening our market share and consolidating our leadership position across these geographies.
If I talk about Nature Bio Foods, which is undergoing an important strategic transformation from an India-centric sourcing and export business into a globally integrated, consumer-focused organic food platform. The first pillar is moving closer to customer through deeper direct relationship with retailer and consumer brands. This transition has created near-term revenue pressures as parts of the traditional intermediary-led business are replaced, but it should improve customer ownership and value chain participation over time. The second pillar is portfolio and sourcing diversification. We are expanding beyond rice and developing sourcing capabilities across different geographies like Turkey and other regions. Together with our European processing capability, this strengthens supply chain flexibility and enables a broader organic portfolio. In India, we are consolidating manufacturing through a new Madhya Pradesh facility with the first phase expected to commence operations in this financial year.
This transition involves near-term cost but should structurally improve efficiency, resource utilization, and cost competitiveness. Our further investment in Leev also provides an entry into Benelux organic retail market, particularly in breakfast and between-meal snacking, and creates an additional platform for downstream growth. Overall, Nature Bio Foods, the organic arm of LT Foods, is moving from an origin-led organic ingredient model towards a globally sourced, destination-focused organic food platform with deeper customer relationship and greater participation in the downstream value chain. To summarize, across geographies and segments, our strategic direction remains clear. Defend and deepen leadership in the core, broaden participation in convenience and value-added foods, strengthen consumer brands, improve the quality and profitability of international operations, and invest in digital and operational capabilities that support long-term scale. India continues to deliver strong, profitable growth. North America provides the platform to extend beyond rice.
Europe and U.K. are progressing through disciplined operational improvements. Middle East is building consumer scale. Nature Bio Foods is being repositioned for high-quality growth. Together, these priorities support our evolution into a larger, more diversified, globally relevant branded food company. With this, I'll hand over to Sachin, CFO of the company, for the detailed financial update. Over to you, Sachin, please.
Thank you, Monika. Good evening, everyone, and thank you for joining us today. I am pleased to share our financial performance for the second quarter and first half of FY 2027. The first half delivered healthy, broad-based growth across all key geographies, led by different segments, even as we stepped up our investments behind our brand and maintained our focus on operational efficiency and disciplined capital allocation. Now, let me begin with our consolidated financial performance.
During Q2 FY 2027, the consolidated revenue grew by 17% on year-on-year basis to INR 3,253 crores from INR 2,772 crores in quarter two FY 2026, a growth of 3% over quarter one FY 2027. The gross profit increased by 12% to INR 1,058 crores from INR 948 crores. The gross margin for the quarter was 32.5% compared with 34.2% in quarter two FY 2026. The change in the gross margin was primarily due to two factors.
Firstly, the change in the shipment terms with the related party from CIF to FOB basis, under which the freight cost now forms part of the cost of goods sold instead of other expenditure. This classification is EBITDA neutral. Secondly, the higher shipment cost across the major markets. Shipping cost as a percentage to revenue rose by almost 40 basis points, which also has an impact on the EBITDA. EBITDA grew by 13% to INR 358 crores from INR 316 crores in quarter two FY 2026, and was marginally lower than INR 363 crores in quarter one FY 2027. EBITDA margin stood at 11%, compared with 11.4% in quarter two FY 2026, and at 11.5% in quarter one FY 2027. This moderation reflects the gross margin factor, which I just explained, and the planned step up investment in the advertisement to support our brands and the new launches.
Advertisement investment increased by INR 25 crores over quarter one, or 2.5% of the revenue as against 1.8% in quarter one, a jump of almost 70 basis points. We also continue to invest in building our health and convenience portfolio ahead of the commissioning of RTH facility in the U.S., which weighed on our quarterly margins. Meanwhile, the organic food segment improved sequentially with EBITDA of INR 22 crores against INR 10 crores in quarter one of this year. Depreciation increased with the capitalization of new assets while the finance cost was higher on the year-on-year basis on higher supplier funding arrangements undertaken to optimize the working capital cycle. PAT increased by 10% on year-on-year basis to INR 180 crores from INR 164 crores. For first half FY 2027, the consolidated revenue grew by 22% to INR 6,414 crores from INR 5,273 crores in last year's FY 2026.
On normalized basis, after adjusting the Golden Star, which was not fully consolidated in quarter one FY 2026, the revenue grew by 18%. The gross profit increased by 15% to INR 2,087 crores. EBITDA grew by 17% to INR 721 crores, and the PAT grew by 9% to INR 364 crores from INR 332 crores in H1 FY 2026. EBITDA margin in this half year stood at 11.2% compared to 11.7% in last year, primarily reflecting higher shipment cost and increased brand investments. Brand investments in this half rose by almost 29% to INR 139 crores. Even as we continue to invest in our brands and future growth platforms, we remain focused on driving operating leverage and efficiencies across the value chain. Now, turning on our segment performance. Our Basmati and the specialty rice business continued to lead our growth.
In the first half of this year, the revenue increased by 27% to INR 5,764 crores from INR 4,552 crores, with volume increase of 11% on a year-on-year basis. The segment contributed 90% of the consolidated revenue. The gross margin in this segment was at 33%, while the EBITDA margin was at 12%. The EBITDA margin in the matured market like India, U.S., and the rest of the world stood at 15%. On the geographical front, India grew by 24% on a year-on-year basis, with volumes increasing by 10%. India accounted for 29% of the revenue. The international business continues to provide significant scale and diversification. North America, which contributed 50% of our revenue, grew by 21% on a year-on-year basis, or 13% on a normalized basis after adjusting Golden Star. Middle East and the rest of the world grew by 25% and contributed 9% of the revenue.
Europe contributed 12% of the consolidated revenue during the period. The operating environment in Europe remained challenging, particularly due to the raw material and the freight cost pressure. Even so, the European business reduced the debt by EUR1.8 million and improved working capital during the first half. In the U.K., performance was impacted by the lower-than-planned mainstream at industrial volume and elevated operating cost. Price recovery initiatives are expected to help offsetting freight and logistic inflation, and the business remains focused on improving volumes, inventory management, and operating efficiencies. Now, coming to the organic and the ingredient business. The revenue in this segment was INR 520 crores in H1 FY 2027 compared to INR 583 crores in the last half year, reflecting the ongoing remodeling of the business. The gross margin held at 34%, and EBITDA margin was at 6%, encouraging.
The segment improved sequentially in quarter two, and we continue to work on improving the business mix and operating performance. On health and convenience portfolio comprising of ready-to-heat, ready-to-eat, and ready-to-cook products, this segment contributed INR 102 crores in this half year, up by 8% from INR 95 crores last year, even before the enhanced RTH capacity has become operational. Ready-to-eat grew by 17% on a year-on-year basis. Ready-to-cook grew by 28%, and the ready-to-heat grew by 7% in rupee terms. We continue to invest in the category with the long-term perspective. Now, coming to the balance sheet and capital efficiencies, where we have made meaningful progress. Inventory days reduced to 159 days from 187 days in the last half year, with the trade payable days reduced to 26 days from 29 days.
As a result of the working capital, days improvement significantly to 143 days from 174 days in the last year. We ended this half year with a net cash position of INR 247 crores in our balance sheet. Our return on capital employed improved to 22.4% from 22% in the last year. Return on equity was at 15.7%, and the interest coverage stood at a comfortable 13.8x .
Improving working capital and capital efficiency remains priority as we continue to invest in a brand, capacity distribution, and new growth opportunities. Now, coming to the standalone performance. For this half year, the revenue in the standalone basis grew by 14% to INR 2,417 crores from INR 2,119 crores. EBITDA increased by 34% to INR 223 crores, with EBITDA margin improving to 9.2% from 7.9%, and the PBT also grew by 28% to INR 173 crores and grew by INR 24 crores to INR 134 crores from INR 108 crores.
The quarter two standalone revenue grew by 17% on a year-on-year basis to INR 1,241 crores, and EBITDA rose to INR 103 crores from INR 101 crores in quarter two, with the margin moderating to 8.3% due to higher other expenditure, including the brand investments. The standalone balance sheet remains net cash positive as on September 2026. Now to summarize, the first half of FY 2027 reflected the continued scale-up of our businesses. More importantly, we have delivered this growth alongside a meaningful improvement in the working capital and a higher return on capital employed.
Going forward, our financial priorities remain clear: sustaining profitable growth in our core Basmati and the specialty rice business, improving profitability in the organic food business, scaling up our convenience food portfolio, driving efficiencies across the value chain, and maintaining discipline across the working capital and capital allocation. These priorities are anchored in our strategies of strengthening the core, expanding distribution and our product portfolio, driving premiumization, and building efficiencies across the value chain. With this, I request the operator to open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Bhavi Chauhan from Care PMS. Please go ahead.
Good evening team. Hope I am audible. My first question is related to the inventory. What is the current inventory level of Basmati rice that is company's holding, and what is the average cost on that inventory? In Q2, our inventory is quite low. What is our strategy for the upcoming season where the prices are expected to be higher?
I will take the first part. For our inventory level, as on September 2026, the paddy inventory was at 82,000 tonnes at an average rate of INR 43, whereas rice inventory was at 260,000 tonnes at an average rate of INR 60.
Second question, you said low. Whatever the inventory we are carrying is to our business plan and is sufficient for whatever the business plan we have.
What are our-
Whereas on-
Okay.
Yeah. Carry on.
So it is expected that our current paddy arrival is around 20%-25% on a higher side. So what is the trend you are expecting and how the procurement will be done?
No, you heard it right. This year, crop 2026, the prices are higher by 22%-25% average. Depends on variety to variety. But as far as our business model, for crop 2025, we are sufficiently covered to deliver our plan. And, yeah. Is it
Okay. The second question is related to the Basmati. So if I look at our Basmati rice segment, our volume growth is around 11% in H1 FY 2027, while the revenue growth is about 22% on a year-over-year basis. But if I look at on a sequential basis, revenue appears to grow modestly in all our geographies. So has anything happened in our quarter-on-quarter performance? Just to specify, what is our volume growth in Q2 FY 2027?
So coming to your question regarding the growth in the Q2. On a year-on-year basis, the quantitative growth in the Q2 is 11%, with the value growing by 21% from the last year's same quarter. As far as the sequential goes, our growth from the last immediate preceding quarter is 6% in the volume terms, whereas in the value terms it is 5%.
Okay. Got it. The last question is related to our RTC segment. If I look at our gross profit margins and the EBITDA margins of our RTC segment have declined sharply in this quarter. Any reason for it? Is it a raw material inflation that company is facing that we are not able to pass on to our consumer or anything like that?
No, we are on the strategy. Certain promotions that were running in the RTH and RTC segment in this half year. It is as per the plan itself. Yes, this has reduced because the sampling is net off in our GP and other things. It has increased our overall PAT or the PBT numbers by INR 2 crores in this half year.
Okay. It gave an impact of INR 2 crores on our revenue and profitability, right?
Correct.
Okay. That's it from my side. Thank you.
Thank you.
Thank you. The next question is from Saurabh Beria from Sameeksha Capital. Please go ahead.
Yeah. Thanks for the opportunity. My question was around the Basmati rice segment. If we see the PBT reports, an 11.4% growth, excluding tariffs, and even the volume growth is 11%. Wasn't there any price increase, is what I mean. Basically, paddy prices had increased. If we see the paddy prices of last year versus the current, even our procurement cost was higher last year. Wasn't there any price increase? That is the broader question. If you can give us some light on this.
In the value terms in this Basmati segment, Basmati and specialty, the value has increased by 26%, whereas the volume has increased by 11.5%. There is a value increase. There is a per ton increase. The rate increase is almost a 13% increase. There is a price increase.
Okay. But if we exclude the tariff impact, the organic growth was 11%, right?
Okay. You are talking about the normalized one last year. The tariff also had a sequential effect. The 25% or the 50% was being imposed in the month of September or August. That had a sequential impact on the last year numbers. The normal rate of tariff for the last year was 10%. For the full half year, it was majorly at 10%, which is currently also at 10%.
Okay, perfect. Also, can you explain to me some unit economics on the part of, say, when we procure paddy and subsequently
Can I do a request? Your voice is getting echoed. I do not know what kind of. Yeah.
Am I audible now?
No, you are audible, but the voice is getting echoed. No problem. Carry on.
Yeah, please go ahead.
I wanted to understand some unit economics on the part of, for say, when we procure paddy and in subsequent quarters or in subsequent years when the paddy costs are higher. How do we pass on the cost? Is there any inventory gain that we mark in our books? From an accounting point of view, how do we deal with the increase in paddy cost?
Normally, whenever the crop changes, we pass on to the consumer, and the whole industry works like this. As far as inventory gain or loss, Sachin, you can add, we do not do any accounting in the books.
We do not recognize any gain or loss. If the loss is there, it is on the basis of cost or market price, whichever is lower. If the market price happens to be low, then only the recording of the loss takes place, but any gain is not recorded.
Okay. That ultimately gets reflected in our OCF, right? If you look at even the first half OCF, there was a higher inventory release just because our procurement cost was lower and selling price was higher in the first half. Is that the case?
What OCF?
We reported a strong OCF in the first half, as compared to the last year. Mainly because of the higher inventory release.
That is basically because of the other factors, the operating cash flow as such. Because in the first quarter, as you know, the paddy season happens to be in December. We generally have a surplus cash. As I have told you, we have a net cash position of INR 247 crores that is sitting as on September 30th. There is an operating cash leverage that happens during this period.
My question was on part of inventory. The inventory release was higher, right, in the current half when we compare it with the previous half of the FY 2026.
So you meant to say our inventory days, you are asking about.
Yeah.
Inventory days, if you talk about the inventory days, last year it was 187 days for the half year. Now it is 160 days. So our inventory days have in fact improved. So we are-
Almost same in a half, yeah.
Yes.
Your question is now, so inventory days are similar as compared to last year in the same H1.
Okay. I will get back to you on this in person.
Sure.
Secondly was on the part of EBITDA margin. I guess we are on a lower note than what the earlier guided margin was. Earlier we were aiming at 11.5%-12% for this year. Since in the current quarter we are on a slightly lower end, is there any revision in the full year guidance and the sustainable numbers?
As Sachin just explained, this has resulted for two reasons, the lesser margin. One is the freight costs are higher by 40 basis points and the second is by 70 basis points, we have invested more in brand.
Is there any revision in the full year guidance or do we expect?
We are very confident on our business model and the fundamentals. As explained by Monika and Sachin, region by region, some markets are in the investment mode, and in the mature market, Sachin has just explained that we are getting more than 15% EBITDA. Once all these market, Europe, Middle East and organic, they will come to the scale, we are very optimistic the margin profile will change.
In the mature state, what EBITDA margin do we target for the organic and RTC, RTH segments?
No, when I say mature market for Basmati like U.S., India, and some-
Yeah, I get that. Once the organic and RTC, RTH are in place, in the mature state, what EBITDA margin do we specifically target for those segments?
No, organic is different. They play mainly in Europe. When that scale up, the margin will improve in organic business in Europe and in Basmati Europe and U.K., and the Middle East.
If I reframe what I meant is in the organic and RTC, what on a sustainable margin target?
We will not give time guideline, but as I said, our fundamentals are strong, our levers are working. Timeline, we do not give.
Or any margin target number.
We are confident on the margin target. Whatever the targets initially given, Ashwaniji was explaining we are eyeing that target, the 13.5%-14% of the EBITDA margin on consolidated basis. It is just investing certain portion of the money in Europe, U.K. that are diluting my overall EBITDA margin. In the mature markets like U.S., U.S., India, we have an EBITDA margin of 15%+. Once every market goes up, our overall EBITDA margin, which is currently at 11%, will increase to almost 13%, 13.5%.
Okay. That is I'll just get back.
Just to add, because you were specifically asking for the organic and RTH business. Organic business, the way it is in the remodeling phase, in the coming two years, we are eyeing this business to also deliver 10%-11% EBITDA margin. I think that was the question that you were asking, right?
Yeah. Perfect. That answers. Thank you.
Yes.
Thank you, Monika.
Thanks. I will get back in a second.
Thank you. Participants, as a reminder, please press star one to ask any question. We have next question from Vipul Kumar from Sumangal Investments. Please go ahead.
I thanks for the opportunity. My question is, substantial amount of working capital has been released in this quarter. Is there any one-off or is it a seasonal phenomenon?
It happens. Hello? It happens because this is a non-peak season for the procurement purpose, so the working capital is released. As I have told you, we have a net cash position during this period. Yes, it will be getting utilized in the coming quarters with the procurement coming up. It is there. It is seasonal procurement.
Okay. Previously we used to share volumes by geography of each major market like India, U.S., but this time it is not part of the presentation. Can you give the volume and value figures for each market, please?
We have stopped that volumes, but we are giving how much we have grown by value and how much we have grown by volume. For competitive reason, we don't give the absolute volume. But we are giving the volume growth and value growth both.
So would you repeat it, sir, if you don't mind?
I said we are giving guidance on value growth and-
No. What was the volume growth and value growth this quarter? That is what I'm asking, sir.
Can you say?
As per our presentation, the revenue mix of India is 29%, whereas the year-on-year growth in the India business is 24%. The North America, the revenue mix is 50%, whereas the value growth was 21%. If you normalize the Golden Star, it is 13%. The Europe group, the revenue was 12%, and the Middle East was at 9% with a growth of 25%.
Okay. And last question, 13.5%-14% EBITDA. From 11% to that journey, how much time it will take?
Sorry, we missed that. To your specific, volume growth is 11%, and value growth is-
13%. 13%. Yeah. So volume growth is 11%.
It is mentioned in the presentation as well.
Presentation as well.
Yeah. So you are asking another question?
No. I was asking about your medium-term EBITDA guidance of 13.5%-14%, if I remember correctly. So right now we are at 11%, so over what time frame we should reach our desired range of EBITDA?
As a policy, we are not giving any timeline. As we said, we are very positive, optimistic that in our mature market, I am repeating, the EBITDA margin is already 15% above in Basmati. Once these three, four sectors will come to the scale, the margin profile will change.
Sir, lastly, what is your experience in a rising paddy market? Our margins generally shoot up or they come down? From past cycles, what is your experience?
If you see historically, whenever the paddy price increase, the input cost increase. We normally pass on to the consumer. The margin profile exceptional 1% gain or minus 1% sometimes. It is in the range of that when the prices goes up or come down.
Okay. Thank you, sir, and all the best.
Thank you, sir. Thank you so much.
Thank you. The next question is from Yash Mehta from Art Ventures. Please go ahead.
Thank you for the opportunity. The advertisement and brand building costs are elevated by about 40 basis points this quarter. Just wanted to know, are they going to be at this level for the rest of this year?
Our ads, only on the ad spend, we will be making an investment of 2.3% as a percentage to revenue. In this quarter itself, our spend got increased to almost a 2.5%, 2.6%. On a yearly basis, it will remain at 2.3%, which is elevated against the last year number. Last year number was 2.1%.
Okay. Are we trying to pass on the increase in the freight cost to the customer?
In some market, yes. In some market it takes, like Middle East is taking time, and Europe it is not. But in some market we pass on. That's why even the consolidated impact is 0.4%.
Okay. Thank you very much.
Thank you, sir. The next question is from Sahej Grewal from Value Vision. Please go ahead.
Hi, sir. Am I audible?
Yes. Yes, you are audible.
Okay. Congratulations on the strong set of results in a tough operating circumstance. I just wanted to understand what is the expectations of our margin for the next two quarters. Do we expect the tightness to continue if the war situation escalates in the coming quarters as well?
In war, its more main impact is on Middle East and in LT Foods, Middle East is contributing its 9%-10%. So we don't see any impact on the margin in the coming quarters. So it should be going like this only. So there will no be tightness. We don't see.
Okay. But it was my assumption that with the freight rates being high, even our exports to U.S. and Europe would be affected with the current shipping rate problem which is there.
Yes. But somewhere we are able to pass on and some we are absorbing that, so the consolidated 0.40 is getting impacted.
Okay. The same question was about our U.K. investment, sir. Since the FTAs and all have been signed, is there any benefit and when is that facility coming up and what do we expect it to contribute in the next coming few years?
So U.K. definitely is a part of our strategy as a Basmati company. U.K. is a big market, and as far as when it will become profitable, as the scale will come and in the next year, we are looking it to be profitable.
Okay. What is the growth of revenue and PAT guidance for the year? That is it, thank you.
Thank you.
I am sorry, I repeat. What is the growth guidance for the year and the coming two quarters, revenue and PAT?
In the coming quarters, as I said, H1, H2 will be very similar.
So we will be maintaining the momentum, basically the kind of things in the first half which we are seeing against the last half whole year. So we are quite positive on maintaining that. Okay. Thank you. Best luck.
Thank you.
Thank you, sir. The next question is from Mr. Rajesh Agrawal from Moneyore. Please go ahead.
Sir, my question is, the accounting on tariff, any tariff refund how we are accounting it for?
We are also reading in the newspaper. We are positive, if you are asking about the new tariff in U.S.A.
No, I am asking for the old refund, sir. Tariff refund we have not accounted for.
No, we have not.
Okay. What is the status on that?
Partly we have got the refund, and we are talking to our customer for that, whatever the understanding is.
How much time it will take for the accounting?
I think by year-end, the things will be clear.
Clear. Okay. Thank you, sir. And sir, you are bullish on the outlook for the company, for the Basmati business?
No, we are very bullish as Basmati category is a category growing 5%-7%. If you see our result, India and Far East business is growing double digits, U.S. is growing, all the markets are growing. So we are very positive on all our businesses, which is specialty rice, organic, and ready-to-eat.
Sir, the growth goes through the profitability because the margins are also for some reason or the other, the freight and all, it is under pressure when the revenue growth and the volume growth and the-
As far as the ROCE is concerned, we are improving on ROCE. This H1, ROCE is around 23% and in the consumer space in the category, we are deriving very well. As far as further margin improvement is concerned, as I said that in the matured market, I am repeating 15% EBITDA in the investing market, once that will scale up-
Okay.
-the EBITDA margin percentage profile will change and further improve the ROCE part back.
Okay. Was there scope of any working capital improvement from here also?
No.
No. Okay. Thank you, sir.
Thank you. A reminder to all participants, please press star one to ask any questions. We have a follow-up question from Mr. Saurabh Beria from Sameeksha Capital. Please go ahead.
Thanks. I wanted to ask on how particularly are we able to reduce our inventory days, because what I believe is Basmati requires a particular number of days of aging, right? So as to maintain the premiumness of it. So how are we particularly able to reduce our inventory days? Secondly, can you share the inventory cost as of March 2026 and current, so the procurement cost which we had incurred? Yeah, that's it.
Our business model is a mix of Basmati, other specialty rice, which is jasmine and organic food. As far as Basmati is concerned, whatever the aging is required brand wise, we do that. There is no shortcut on that, and that is sufficiently covered.
Okay. Secondly, on the part of our procurement cost as of March 31, FY 2026, and currently what is the cost of current inventory.
As I have told you, the current inventory, the paddy rate is almost INR 43 per kg, whereas rice is INR 60. As on March 2026, the paddy rate was at INR 36, whereas the rice rate was at INR 54.
Perfect. Do we plan of any near-term price increase because since realization price growth has not been in line with the increase in our input cost, have you not passing on completely? Secondly, on part of what is the like how do you see the sensitivity in the U.S. and the Indian markets post price increase? Is there usually any impact on the demand side?
I will answer your last question first. As far as the sensitivity on the demand by increasing price, we have not seen. We are in this business the last more than 50 years, and we have seen the real test case when this duty came and majority has been passed on, and we have not seen any impact on the demand. If you see, Basmati is roughly, globally the market size of rice is 500 million tons and Basmati is just approximately 10 million, which is roughly 2% of the total market. Normally in the specialty rice we don't see any impact on the price increase on the demand. Even in Middle East, what we are seeing is the freight cost has gone up by, I will say it was $50, $40. Now it's more than $200. There is no impact on the demand.
My first question regarding any near-term price increase because I believe the increase in current paddy costs has not been completely passed on, right?
The crop has just started coming in the first week of September and as these crops will come, the price increase will be passed on. Like in India some crop we sell, the new crop already price increase has been given and very well accepted.
Perfect. But we will pass on this increased cost next year, right? When we sell off the inventory-
Yeah.
-in the second half.
Yeah.
Correct.
Yeah. We are confident. And historically these kind of periods has come and we have been able to pass on successfully.
Perfect. Thanks. That helps.
Thank you. The next question is from Mr. Premal Shah. Please go ahead.
Yeah. Hi, am I audible?
Yes, sir.
Yeah. Good afternoon. My basic question is, what the latest crop outlook would you update with looking at this weather impact in the current year crops for Basmati specifically?
So as far as crop is concerned it's more or less like last year crop. But last year crop there is no carryover and demand has grown by on an average 4%-5% India and export together. So this year the prices has opened as on an average 25% against last year. Initial variety is 35%, but in some variety. So average we are eyeing that roughly 25% the prices will be high against last year.
Okay. Would the finished product pricing also increase to the same range of 20%-25% or higher?
The material cost is roughly it depends 70%. Proportionately the pricing will reset.
Okay. Sir, what are the current local finished product prices just now? Because they were, I guess about between INR 87- INR 95, I think in the first quarter of this calendar year. So where would they be hovering just now?
You mean to say the impact of the cost has been passed in-
No, sir. What I mean to say is your finished product, like DAAWAT is selling their rice or whatever is there in the open market. Is the price range about INR 110-INR 115 per kg, compared to what it was in the first quarter at about INR 85-INR 90? That is what I am trying to ask.
If you ask me, open market means retail, in the retail-
Yeah, that is right.
Ritesh can add. Our most premium product now sells INR 250 a kg.
Our biryani, which last year same time used to be around INR 220 price to consumer.
That is at about 15% increase.
Yeah, has already been taken.
What is your average realization currently, say, in the month of October, approximate average realization per kg?
It's-
Putting all the different grades and brands together of DAAWAT.
Around INR 80.
Around INR 80. Okay. Compared to the first quarter of this year?
Almost 10%.
8% improvement over Q1.
Correct.
Sorry, how much? 8%?
Improvement over Q1 of this year.
Yeah, but how much?
8%.
8%. Okay.
[inaudible], 8%.
Yeah. Got it. Thank you. Thank you very much.
Thank you, sir. We have next question from Mr. Saurabh Beria from Sameeksha Capital. Please go ahead.
Okay. Just last question from my end. Do we even benefit from the falling rupee if we compare rupee last year versus current year? Do we hedge that exposure or any impact is seen in the top lines?
As far as the Forex policy is concerned, Sachin can add it too. We are following for the last 10 years, 50/50. 50% we hedge and 50% we keep open. As you said, if the rupee depreciate, definitely we get benefit.
Benefit.
We benefit.
We are benefiting, Saurabh. As an exporter, rupee depreciating is always beneficial. Yes, it has been because we have a policy of purchase as well. Purchase in the season, outside the season. Somewhat it gets offset with the purchasing trend as well. As far as the rupee is concerned, rupee depreciation benefits us.
If you can quantify, like for the current normalized growth of 22%, which Basmati segment had, Basmati and specialty rice, how much was the Forex impact, if you can quantify on that part?
Almost, if you talk about the Forex on a constant dollar basis, it should be almost 4%-5% of the dollar value impacted.
Okay. On our top line, if you can give a percentage of the total top line, how much impact was that of the Forex?
4%-5%, what I told you. 4%-5% is the impact.
Okay, perfect. But still, if I do the math, company reports 22% growth in first half of FY 2027 in the Basmati and specialty rice. 11% was the volume growth. Around- 12% you said was the realization growth. So that realization, according to you, includes the Forex impact because the math doesn't go there.
Correct. It includes the value terms because we report in the INR terms. So it includes the Forex impact.
Okay. Perfect. Okay, thanks.
Thank you.
Thank you. Ladies and gentlemen, I now hand the conference over to LT Foods management for closing comments. Over to you.
On behalf of the management of LT Foods Limited, we sincerely appreciate your participation in our post-earnings call today. We hope we have been able to address most of your queries and provide clarity on our performance and outlook. For any further questions or follow-ups, feel free to reach out to me or our investor relation partner, Ernst & Young, and the team will be happy to connect with you offline and assist with any additional information you may require. Moderator, now we can close the call, please. Thank you.
Thank you. On behalf of Motilal Oswal, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.