LT Foods Q2 FY27 Earnings Call: Revenue Grows 17% To Rs. 3,253 Cr, Paddy Inflation Pass-Through Underway (LTFOODS)

L T Foods Ltd held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Double-digit growth with modest margin compression

• Q2 FY 2026-2027 revenue grew 17% YoY to Rs.3,253 Cr Q2 EBITDA grew 13% to Rs.358 Cr — margin of 11.0% vs 11.4% in Q2 FY26 and 11.5% in Q1 FY27; H1 FY27 EBITDA grew 17% to Rs.721 Cr (margin 11.2% vs 11.7% in H1 FY26). Q2 PAT rose 10% to Rs.180 Cr — H1 FY27 PAT grew 9% to Rs.364 Cr (vs Rs.332 Cr in H1 FY26); Q2 gross margin declined to 32.5% from 34.2% YoY, partly on the CIF-to-FOB related-party shipment change and ~40 bps higher shipping costs as% of revenue. Margin shortfall vs guidance — Q2 EBITDA margin came in below the earlier guided 11.5%–12% for FY 2026-2027; management attributed the gap to 40 bps higher freight and 20 bps higher brand investment and did not announce a formal guidance revision. Standalone H1 FY27 outperformed — revenue +14% to Rs.2,417 Cr, EBITDA +34% to Rs.223 Cr with margin up 2.2% from 7.9%; Q2 standalone EBITDA of Rs.103 Cr at 8.3% margin on higher other expenditure including brand investments. Capital efficiency improved — H1 FY27 inventory days down to 159 from 187, working capital days to 143 from 174, net cash of Rs.247 Cr, ROCE improved to 22.4% from 22%, ROE 15.7%, interest coverage 13.8x.
• Q2 EBITDA grew 13% to Rs.358 Cr — margin of 11.0% vs 11.4% in Q2 FY26 and 11.5% in Q1 FY27; H1 FY27 EBITDA grew 17% to Rs.721 Cr (margin 11.2% vs 11.7% in H1 FY26).
• Q2 PAT rose 10% to Rs.180 Cr — H1 FY27 PAT grew 9% to Rs.364 Cr (vs Rs.332 Cr in H1 FY26); Q2 gross margin declined to 32.5% from 34.2% YoY, partly on the CIF-to-FOB related-party shipment change and ~40 bps higher shipping costs as% of revenue.
• Margin shortfall vs guidance — Q2 EBITDA margin came in below the earlier guided 11.5%–12% for FY 2026-2027; management attributed the gap to 40 bps higher freight and 20 bps higher brand investment and did not announce a formal guidance revision.
• Standalone H1 FY27 outperformed — revenue +14% to Rs.2,417 Cr, EBITDA +34% to Rs.223 Cr with margin up 2.2% from 7.9%; Q2 standalone EBITDA of Rs.103 Cr at 8.3% margin on higher other expenditure including brand investments.
• Capital efficiency improved — H1 FY27 inventory days down to 159 from 187, working capital days to 143 from 174, net cash of Rs.247 Cr, ROCE improved to 22.4% from 22%, ROE 15.7%, interest coverage 13.8x.

India and North America carry growth; Europe and UK remain pressured

• Basmati & specialty rice (90% of H1 FY27 revenue) grew 27% to Rs.5,764 Cr — volumes +11% YoY; gross margin 33%, EBITDA margin 12%, with 15% EBITDA margin in mature markets (India, US, rest of world).
• H1 FY27 geography mix — India +24% (volumes +10%; 29% of revenue); North America +21% (+13% normalized for Golden Star; 50% of revenue); Middle East & rest of world +25% (9% of revenue); Europe (12% of revenue) remained challenging on raw material and freight cost pressure, though it reduced debt by €1.8 million in H1 FY27.
• India branded portfolio grew ~8% YTD FY 2026-2027 — vs category growth of ~1.3%, driving a 140bps market share gain; biryani kits grew 38% in H1 FY 2026-2027; household reach rose YoY from 56.2 lakhs to 67.5 lakhs.
• UK underperformed in H1 FY27 — lower-than-planned mainstream and industrial volumes and elevated operating costs; price recovery initiatives are expected to help offset freight and logistics inflation.
• Organic & ingredients revenue declined to Rs.520 Cr in H1 FY27 — vs Rs.583 Cr in H1 FY26 amid business remodeling; EBITDA margin 6%, though Q2 FY27 EBITDA improved sequentially to Rs.22 Cr from Rs.10 Cr in Q1 FY27.
• Health & convenience portfolio grew 8% YoY to Rs.102 Cr in H1 FY27 — ready-to-eat +17%, ready-to-cook +28%, ready-to-heat +7% in rupee terms, before the enhanced RTF capacity becomes operational.
• RTC/RTH margin decline was plan-driven — management attributed the sharp GP and EBITDA margin decline to planned promotions/sampling in H1 FY 2026-2027, not raw material inflation, with a confirmed Rs.2 Cr impact on revenue and profitability.

Sharp paddy inflation with pass-through underway

• Procurement costs up sharply — CFO Sachin Gupta disclosed current inventory procurement cost of Rs.43/kg for paddy and Rs.60/kg for rice, vs Rs.36/kg and Rs.54/kg as of 31 March 2026 — an increase of ~19% for paddy and ~11% for rice.
• FY 2026-2027 Basmati crop prices opened ~25% above FY 2025-2026 levels — initial varieties up ~35%; management is eyeing a roughly 25% average price increase vs FY 2025-2026 for the season; material cost is roughly 70% and finished product pricing will reset proportionately (no specific finished-price percentage quantified).
• Pass-through already begun — the new crop began arriving the first week of September 2026; in India, price increases on some new-crop sales were "very well accepted"; Daawat's premium Biryani product now retails at Rs.250/kg vs ~Rs.220/kg a year ago (~15% increase taken).
• Average Daawat realization at ~Rs.78-80/kg — as of October 2026 (Q3 FY 2026-2027), an ~8% improvement over Q1 FY 2026-2027, confirmed by CFO Sachin Gupta.
• Freight escalation in the Middle East — freight costs have risen to more than $200 currently from roughly $20–50 previously, with no impact on demand observed; consolidated freight impact currently at 0.4% (Q2 FY 2026-2027), with pass-through taking time in the Middle East and not happening in Europe.
• Historical pricing resilience — in 50+ years in the business, management has observed no demand sensitivity to price increases; margins historically fluctuate within roughly ±1% across paddy price up/down cycles; the global rice market is ~500 million tonnes with basmati at ~10 million tonnes (~2% of total).

Seasonal cash release, hedged forex, and crop coverage

• Inventory as of September 2026 — paddy inventory of 82,000 tons at an average rate of Rs.43 and rice inventory of 2,60,000 tons at Rs.60 (CFO Sachin Gupta); MD & CEO Ashwini Kumar Arora said inventory is in line with the business plan and sufficient to deliver it.
• Basmati aging fully adhered to — all brand-wise aging requirements are met with "no shortcut" and aging is "sufficiently covered," addressing the low-inventory concern.
• Working capital release is seasonal, not one-off — CFO attributed the release to the non-peak procurement season; the net cash position will be re-deployed in H2 FY 2026-2027 as procurement ramps up; inventory days of 160 in H1 FY27 vs 187 in H1 FY26, countering the analyst's suggestion that days were higher YoY.
• Forex policy of hedging 50% of exposure — in place for the last 10 years; as an exporter, rupee depreciation benefits the company, though the benefit is somewhat offset by the purchase policy (in-season vs off-season purchases).
• Forex impact quantified at 4-5% — for H1 FY 2026-2027, CFO Sachin Gupta quantified the impact at 4-5% of the dollar value and confirmed 4-5% as the impact on total top line; the segment's ~12% realization growth is reported in rupee terms and therefore includes the forex impact.
• No further working capital improvement expected — management said there is no scope for further improvement from current levels; no inventory gains are recognized in the books — only losses, on a lower-of-cost-or-market basis.

Tariff refund accounting pending; new tariff tracked

• Old US tariff refund not yet accounted for — refund received only partly so far, with ongoing discussions with customers on the understanding; MD & CEO expects clarity on the accounting by end of FY 2026-2027.
• New US tariff — management said it is tracking developments via news reports and remains positive.
• Tariff history — CFO Sachin Gupta noted the 25%/50% tariff imposed in August/September had a sequential impact on the prior-year numbers (H1 FY 2025-2026), while the normal tariff rate was 10% for the major part of H1 FY 2025-2026 and is currently also at 10% (H1 FY 2026-2027).
• US remains the largest international market — the company advanced the ready-to-heat portfolio (expanded microwavable formats) and continued premiumization across Royal and Golden Star; ambition is to leverage rice leadership into a broader branded foods platform in North America.

Qualitative H2 guidance; medium-term margin ambition without a timeline

• H2 FY 2026-2027 guidance is qualitative only — CEO said H2 will be "very similar" to H1 FY 2026-2027; CFO said the company will maintain first-half momentum and is "quite positive" on sustaining it; no specific revenue or PAT growth numbers were provided for FY 2026-2027.
• Medium-term EBITDA margin ambition of 13%–13.5% — management is eyeing up to 14% vs ~11% currently (FY 2026-2027), as investment-phase markets scale (period unspecified); matured basmati markets such as the US and India already deliver 15%+ EBITDA, while Europe/UK investments are diluting the overall margin; management declined to give a timeline, stating as policy it does not provide timelines.
• Organic business margin target of 10%–11% EBITDA — management is eyeing this over the coming 2 years (i.e., by FY 2028-2029), while declining to commit to timelines for margin scale-up ("we will not give time guideline").
• UK profitability targeted in FY 2027-2028 — CEO said UK is "definitely a part of our strategy as a Basmati company" and a big market; management is looking for the UK business to turn profitable in FY 2027-2028 as scale builds.
• Management is "very bullish" — cited the Basmati category growing 5-7% (period unspecified) and, per Q2 FY 2026-2027 reported results, India growing double digits with the US and all other markets also growing; positive across specialty rice, organic, and ready-to-eat businesses; H1 FY 2026-2027 ROCE at ~23% and improving.
• Basmati crop outlook stable — the FY 2026-2027 crop is "more or less" similar to the FY 2025-2026 crop, which had no carryover, with demand (India and exports combined) growing ~4-5% on average; FY 2027-2028 pass-through of costlier inventory is expected given historical precedent.
• Middle East war exposure limited — the region contributes 9-10% to LT Foods' business; management does not expect any margin impact or tightness in H2 FY 2026-2027; Q2 profitability there was significantly impacted by supply disruptions and freight escalation, with mitigation (alternate routing, spend optimization, pricing) expected to show full impact in subsequent quarters of FY 2026-2027.