Daawat basmati rice maker LT Foods Q3 profit drops on higher costs; shares slip
India's Daawat' and 'Royal' basmati rice maker LT Foods posted a 5.2% fall in third-quarter profit on Monday, as a surge in rice prices after the government eased export rules spiked costs, sending its shares down as much as 9.3%.
The company said consolidated net profit fell to 1.43 billion rupees ($16.56 million) from 1.53 billion rupees in the October-December quarter.
While revenue from operations rose 17.2% year on year to 22.75 billion rupees, total expenses jumped 19.2% to 20.94 billion rupees. Cost of its raw materials, which constitutes around 77% of total expenses, rose nearly 11%.
LT Foods does not segregate its revenue by segments or geography.
The profit drop comes despite the country seeing basmati rice exports in 2024 surging 16.3% to a record 5.7 million metric tons, as Saudi Arabia, Iraq and the United Arab Emirates increased buying, Reuters reported last week.
India removed a floor price for basmati rice exports in September last year to help farmers struggling with debt. Higher costs boost overseas sales while also helping the country retain its market share. India accounts for around 75% of global basmati production.
As the El Nino weather pattern raised the spectre of poor monsoon rains, India imposed various curbs on rice exports in 2023 and extended them into 2024 to keep local prices in check ahead of the April-June national election.
In November, LT Foods said it planned to invest 185 million riyals ($49.32 million) over the next 5 years in Saudi Arabia while eying revenue to the tune of 435 million riyals in the same period.
This comes as around 70% of India's basmati rice exports in FY24 went to the Middle East, with Saudi Arabia now the top destination at 21.4% share, according to Motilal Oswal.
($1 = 86.3670 Indian rupees)
($1 = 3.7510 riyals)
