The shares of LT Foods Ltd rose more than 5% on Tuesday, 26 November 2024, following the announcement of the company's official entry into Saudi Arabia's $2 billion rice market. The company's shares hit ₹375 in intraday trading on the Bombay Stock Exchange (BSE), a 5.57% rise from the previous day's closing price.
Company's entry into the Saudi market
LT Foods, known for its basmati rice brands 'Daawat' and 'Royal', officially inaugurated a new office in Riyadh, Saudi Arabia, which will act as the regional hub for its operations. The new office will enable LT Foods to capitalise on its expertise in rice and rice-based food products, tailoring offerings to suit Saudi consumers' tastes and culinary traditions.
This expansion into the Kingdom of Saudi Arabia (KSA) is seen as a strategic move, considering Saudi Arabia's position as one of the largest importers of rice globally.
Investment plans for Saudi Arabia
As part of its expansion strategy, LT Foods plans to invest SAR 185 million over the next five years. This investment will go towards establishing warehousing facilities, stocking products, and recruiting staff in the Kingdom. Additionally, the company aims to generate a revenue of SAR 435 million in the same time frame.
With the Saudi Agricultural and Livestock Investment Company (SALIC) as a strategic shareholder, LT Foods also plans to establish local manufacturing facilities in Saudi Arabia, reinforcing its commitment to long-term growth in the region.
LT Foods Q2FY25 results
Investors looking at LT Foods for share market investment should also be mindful of the company's recent financial performance. LT Foods reported a 4.3% year-on-year decline in net profit for the second quarter of FY25, totalling ₹150.6 crore, down from ₹157.3 crore in the same period last year.
Despite this, the company's revenue from operations rose by 6.6%, reaching ₹2,107.8 crore, compared to ₹1,977.8 crore in Q2 FY24. However, the company's EBITDA dropped by 4.7%, and its EBITDA margin decreased to 10.9%, down from 12.2% in Q2 FY24.
Stock performance and market statistics
As of 11:38 AM on 26 November 2024, LT Foods shares were trading 1.27% higher at ₹359.70. Over the last year, LT Foods' stock has corrected 16% from its 52-week high of ₹447.95, reached on 9 September 2024. However, it is still up 134% from its 52-week low of ₹160.05, recorded on 14 March 2024.
With a market capitalisation of ₹12,473.33 crore, LT Foods' shares are trading at a price-to-earnings (P/E) ratio of 63.92 times, with an earnings per share (EPS) of ₹5.56.
Stock movement and share market investment
The recent expansion announcement has had a positive impact on LT Foods' stock price. Investors looking to make a share market investment in LT Foods may find the company's continued growth in the Saudi market an attractive opportunity. The strategic move to enter the $2 billion rice market aligns with global trends towards international market expansion, potentially boosting the company's long-term revenue streams.
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