LT Foods Shares Plunge After Weak Q3 Earnings

Shares of LT Foods dropped by 9 percent on January 27, 2025, following the release of the company’s disappointing Q3 financial results. The decline in share price, which was seen trading at ₹367.85 on the NSE at 3:04 pm, was further fueled by a sharp spike in trading volumes. By that time, over 11 lakh shares had exchanged hands, more than double the daily traded average of 5 lakh shares over the past month.

Q3 Financials Show Weak Profitability

The basmati rice maker reported a near 6% fall in its Q3 net profit, which stood at ₹143 crore, down from ₹152 crore during the same period last year. This profit decline was largely attributed to a rise in operational expenses, including raw material costs, finance costs, and employee benefits, all of which surged compared to the previous year.

The EBITDA margin also saw a contraction, dropping to 11% from 12.3% in the previous fiscal year’s Q3, further signaling the weak operational performance for the quarter.

Revenue Growth Amid Rising Expenses

On the positive side, LT Foods saw a 17% increase in its Q3 revenue, reaching ₹2,275 crore compared to ₹1,942 crore in the same quarter of the previous fiscal year. This strong revenue growth, however, was overshadowed by the rising expenses that eroded profitability and weighed on the company's margins.

Acquisition Plans

In a strategic move, LT Foods' board approved the acquisition of a 4% stake in Raghunath Agro Industries for ₹2.7 crore. Raghunath Agro is a subsidiary of DAWAAT Foods, which is also fully owned by LT Foods. This acquisition is part of the company’s ongoing efforts to expand its holdings and strengthen its position in the food processing sector.

Outlook

Despite the disappointing earnings for Q3, the company remains focused on growth, with plans for strategic acquisitions like the one in Raghunath Agro. However, investors will be closely watching LT Foods' ability to control rising costs and restore profitability in the upcoming quarters.

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