LT Foods: From Losses To Profits In FY13

LT Foods announced its Q4FY13 numbers on May 27, 2013. The company has outperformed, as was expected, beating its own target for FY13. The stock prices ended the day higher by over 1%.

In Q4FY13, the revenues of LT Foods grew by 20.23% to Rs 626.54 crore over that in the previous year corresponding period. At the same time, its EBIT grew by 46.88% to Rs 62.66 crore, indicating improved operational efficiency. This translates into the EBIT margin improving by 181 basis points.The company’s net profits, however, declined by 23.41% to Rs 21.73 crore. This was a result of volatility/unadjusted balance of the rupee against the dollar during the previous year that led to a foreign currency exchange loss, and which has been classified as ‘exceptional items’.

For FY13 as a whole, LT Foods saw its revenues grow by 55.32% to Rs 2229.58 crore. This has far surpassed the growth of 25% that it had targeted in FY13 over FY12. It had achieved 90% of this growth target by Q3FY13, and thus an impressive performance for FY13 was pretty much expected.

The year also turned out to be a profitable one for LT Foods, after it reported losses of Rs 2.02 crore in FY12. This was mainly on account of high interest costs, which amounted to as much as 65% of the EBITDA in FY12. This component made up for a tad below 50% in FY13, showing improved operational efficiency. In FY13, LT Foods announced a net profit of Rs 60.07 crore.

We had recommended LT Foods in Dalal Street Investment Journal, Vol 28, Issue # 7 (dated March 24, 2013), when it was trading at a price of Rs 52 per share. Since our recommendation, the stock has moved up by 16.64% to Rs 60.65 per share. This takes the annualised returns on the stock to 55.44%, which should be enough for investors to book profits at.

Having looked at the performance of LT Foods in FY13 and its prospects, we maintain our positive outlook on the scrip over the long term. While risk averse investors can book profits in the scrip, investors with a higher risk appetite can stay invested for the longer run.