LT Foods FY26: Strong top line, higher brand spends, and capacity bottlenecks in convenience foods

LT Foods closed FY26 with a sharp step-up in reported scale, while taking on a heavier investment load across brands, international expansion, and new categories. Revenue including other income rose 26% year on year to INR 11,023 crores. Gross profit increased 22% to INR 3,692 crores. EBITDA grew 16% to INR 1,236 crores, while profit after tax inched up 2% to INR 625 crores.

Management repeatedly separated reported performance from what it called normalized performance, primarily due to US tariff impacts and a change in shipment terms. For FY26, the company cited normalized revenue growth of 19% excluding the US tariff. It also indicated a normalized gross margin of 35.3% excluding US tariff and the shipment-term change. The normalized EBITDA margin was stated at 11.8% excluding the US tariff, reflecting higher brand investments and strategic spending.

The core rice business drove growth, led by North America

The Basmati and Other Specialty Rice segment remained the anchor, contributing 88% of FY26 revenue at INR 9,742 crores, with 29% segment revenue growth and a 12.3% EBITDA margin. The presentation also showed 12% volume growth for the segment in FY26.

Within the rice segment, the company highlighted a clear divergence in geographic outcomes. India contributed 29% of mix for the rice segment and grew 10% year on year. North America contributed 48% of mix and delivered 53% year on year growth, although the company also cited an 8% normalized growth figure excluding US tariff and Golden Star. Europe contributed 15% of mix with 34% growth. Middle East and Rest of the World contributed 8% of mix and declined 7% year on year, with the company separately calling out INR 53 crores of revenue from Saudi Arabia in FY26.

On the concall, management linked the North America outcome to execution during disruption, stating that service levels were kept robust during the tariff-led dislocation and that this helped acquire customers and consumers, even though it pressured margins.

Financial summary (reported)

Organic and convenience foods: growth, but profitability under pressure

The Organic Foods and Ingredients segment delivered FY26 revenue of INR 1,016 crores, up 9% year on year. However, profitability was weak. The segment EBITDA margin in the presentation was 5.8% for FY26, and management said the segment is currently under stress due to investments, currency fluctuations, and commodity price pressure.

The company provided specific reasons for the FY26 softness: capacity expansion and infrastructure build in Europe, initial investments to scale a CPG business, and legal and related costs tied to the countervailing duty matter. Importantly, management stated that there is no structural decline in organic revenues and that performance is expected to normalize over the coming quarters.

The Ready-to-Heat and Ready-to-Cook segment remained a small revenue contributor at INR 187 crores in FY26, but was positioned as a strategic growth lever. The segment has grown about 2.5 times from FY21 to FY26, but the presentation showed negative EBITDA margins (minus 9.6% for FY26). Management attributed early-stage margin pressure to sampling and promotional spending and acknowledged that some growth opportunities could not be serviced because of capacity constraints in the Ready-to-Heat platform. Enhanced capacity was stated to be expected to become operational from Q2.

Segment snapshot (FY26)

Capital allocation: improved working capital, stable leverage

On working capital discipline, LT Foods reported improvement across key metrics. Working capital days reduced to 176 from 196 in FY25, led by lower inventory days (248 versus 277). Receivable days improved to 28 from 31, though payable days reduced to 101 from 113.

Return metrics stayed elevated but softened, with ROCE at 20.4% versus 21.0% and ROE at 14.9% versus 16.8%. Interest coverage declined to 7.6 times from 10.0 times. Management explained that interest cost rose due to supplier funding arrangements aimed at optimizing the working capital cycle.

Leverage remained controlled with net debt to EBITDA at 0.60 times and net debt to equity at 0.16 times.

Key risks and strategic watchpoints

The investor deck included a material regulatory update related to the US countervailing duty investigation for Ecopure Specialities Limited. The US Department of Commerce, through its final order dated February 23, 2026, revised the CVD rate on Ecopure’s exports of organic soybean meal to the United States from 340.27% to 75.48%. The company stated it has filed an appeal in the Court of International Trade.

The concall also highlighted macro volatility. Management spoke about freight disruptions in parts of the Middle East and significant increases in freight rates for certain routes. It also flagged ongoing uncertainty around US import tariff developments and higher input costs.

Outlook: double-digit growth focus with gradual margin improvement

Management’s forward commentary emphasized continued double-digit growth supported by global demand, distribution expansion, and new product launches. It also indicated that margins should gradually improve as brand investments normalize and scale benefits come through. On the call, the company reiterated long-term organic growth guidance of 10% to 12%.

Capex was guided to remain at similar levels as FY26. Management stated FY26 capex was around INR 330 crores and that FY27 capex is expected to be in the same range.

For investors, the FY26 message is clear. LT Foods delivered strong scale-up in the core rice business while choosing to invest aggressively behind brand building, international expansion, and convenience foods capacity. The near-term margin and regulatory noise, especially in organics, is not fully behind the company. But execution milestones such as improved working capital, controlled leverage, and planned capacity additions will remain the key markers to track through FY27.