LT Foods share gains more than 2% after rating upgrades on bank credit facilities

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LT Foods rose 2.65 percent to Rs 59.90 after the rating agency upgraded the credit ratings of the company’s bank loan facilities to Rs 1,187.5 crore.

CRISIL Ratings upgraded its rating on LT Foods’ banking facilities from “CRISIL A / Stable / CRISIL A1” to “CRISIL A- / Positive / CRISIL A2 +”. The short-term rating of the Company’s banking facilities was also upgraded from “CRISIL A2 +” to “CRISIL A1”.

The credit rating agency said the upgrade reflects the continued improvement in the group’s business and financial risk profiles.

The group achieved an operating profit of Rs 3,499 crore in the first nine months of fiscal 2021, compared to Rs 2,948 crore in the first nine months of fiscal 2020.

The operating margin was also higher at 12.4% for the first nine months of fiscal 2021, compared to 11.5% for the corresponding period of the previous fiscal year. Going forward, CRISIL Ratings expects the company’s risk profile to continue to improve over the medium term.

The financial risk profile has also improved as evidenced by the debt / EBIDTA ratio of 2.2 times as of December 31, 2021, which is well below CRISIL Ratings’ expectations of maintaining the aforementioned ratio of 3 times in the medium term. . CRISIL Ratings expects the ratio to remain below 2.5 times over the medium term despite increasing revenues.

The ratings continue to reflect the strong position of the LT Group in the basmati rice market, resulting in sales growth and stable profitability. The ratings also take into account the diversified geographic scope of the group thanks to strong brands, an established marketing network and improved financial risk profile.

These strengths are partly offset by a significant need for working capital, sensitivity to the volatility of commodity prices and changes in the trade policies of the main importing countries.

LT Foods is a branded specialty foods company. The company is engaged in the milling, processing and marketing of branded and unbranded basmati rice, and in the manufacture of rice-based food products in the domestic and foreign market. Its geographic segments include India, North America and the rest of the world.

The company’s consolidated net profit increased 46.1% to Rs 66.33 crore on a 7.9% increase in net sales to Rs 1074.98 crore in Q3 FY21 compared to Q3 FY20.

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