Following the central government's lifting of the Minimum Export Price (MEP) on basmati rice on Friday, shares of LT Foods, which owns and operates the Indian basmati rice brand Daawat, and KRBL, which owns the flagship India Gate basmati rice brand, saw intraday trading on the BSE on Monday that saw gains of up to 10%.
The MEP for basmati rice was reduced to $950 per tonne from $1,200 per tonne when it was initially implemented last year. In Monday's intraday trading on the BSE, shares of LT Foods surged 10% to a record high of Rs 446.30, while shares of KRBL surged 7% to Rs 324.30 on the strength of a threefold increase in average trading volumes.
The business of specialized rice and rice-based delicacies is the main focus of LT delicacies. Among the company's main brands are DAAWAT and Royal, which is one of the top players in the North American basmati rice market. In contrast to the BSE Sensex's 0.19 percent increase, LT Foods was up 8% at Rs 441.20 at 11:02 AM. The stock has risen over its previous peak, which it reached on September 6, 2024, at Rs 418.75. Since its June low of Rs 186.75, the market price of LT Foods has more than quadrupled, or increased by 139%.
The main brand of LT Foods, Daawat, is the industry leader in more than 80 countries and holds a 30% market share. However, Royal, another major brand, still holds a market share of over 50% in the United States. Additionally, Royal has taken the lead in other regions.
According to the firm, its strategy focus on sustainable growth, innovation, and market expansion positions it for a bright future. The firm intends to leverage the growing demand for specialized and organic food items worldwide by expanding into high-growth regions like the Middle East and Far East and strengthening its position in established countries like the US, Europe, and India.
LT Foods said in its annual report for the financial year 2023–24 (FY24) that the firm is working at a five-year sales compound annual growth rate (CAGR) of 10–12%. The business wants to add 140–150 Basis Points (BPS) to its earnings before interest, taxes, depreciation, and amortization (EBITDA) margin during the next five years. Additionally, the firm announced that it will keep growing its core business of selling Basmati rice by increasing its brand investments, extending its distribution network through the use of the Revised Route-to-Market, and growing its product portfolio by utilizing the distribution network that already exists.
Furthermore, there is a great chance to break into new markets due to the growing demand for premium and specialty rice types worldwide, particularly in the Middle East, North America, and Europe, where there is a growing appreciation for high-quality, ethnic meals, according to LT Food.
It also said how product development innovations, including meal kits that are ready to eat and prepare, might draw convenience-seeking customers, especially from the millennial and Gen Z age groups.
With an installed manufacturing capacity of 195 metric tonnes per hour, KRBL, the first integrated rice manufacturing enterprise in India, is also among the world's largest manufacturers of rice. Both basmati and non-basmati rice are produced by the firm. Additionally, it produces furfural, de-oiled cakes, bran oil, and other byproducts.
The firm primarily produces and sells branded rice products in India and other countries. The company's flagship brand, "India Gate," commands a premium in both the domestic and foreign markets and accounts for over 55% of KRBL's total revenue.
