This multibagger zoomed over 690% from March 2020 lows! Is it still a good bet?

Shares of LT Foods, a processor of rice and other speciality foods in India, have zoomed over 690 per cent from March 2020 low level. The scrip soared to Rs 126.60 on October 31 from a level of Rs 16.40 on March 20, 2020.

Analysts said the company is seeing double-digit sales growth while it is reporting a 20 per cent-plus profit growth compounded annually over the last couple of years.  The stock could offer a decent upside going forward, they said.

At 11:25 hours, the shares were trading 3 per cent lower at Rs 122.65 on BSE, a day after the company posted its numbers for the quarter ended September 2022. The small-cap stock hit a 52-week high of Rs 135.85 on October 28.

According to Anuj Jain, Research Head and Co-Founder at Green Portfolio, LT foods is a very strong brand. The company is growing continuously with double-digit CAGR in top line for 3, 5 and 10 years. A similar CAGR figure for profits is over 20 per cent.

He said that the balance sheet also looks strong with a DE of .5 and Debt to EBITDA of 1.7.

"LT is diversifying into a new age, the high-valuation business of 'Ready to Eat' food and snacks. Last 3 years CAGR sales growth was 59%. FY22 sales were 121 crores, not big given the overall size of the LT. However, if such growth could be maintained, the price can see a significant rerating," he added.

Jain, however, noted that a very high level of inventory (250 days) is a cause for concern. It seems like it is due to the nature of business, as KRBL also has very high inventory days of over 300, he added.

"Given all these, we believe that there is still some upside left in LT in the medium term. Long-term looks very promising," Jain said.

"While new harvest is coming, the Dollar against the rupee is also at a high. Also, the Russia and Ukraine war is still in process, this will help the rice companies to have strong demand in export," Ravi Singhal, CEO, GCL told Business Today.

He suggested a target of Rs 144-168 for the coming six months. Investors should keep a stop loss of Rs 110.

Manoj Dalmia Founder and Director-Proficient Equities said LT Foods has seen some increase in volume and has broken its previous peak of Rs 92.

Investors can look for a target price of Rs 178, he added.

The company posted a net profit of Rs 89.5 crore for the quarter ended September 2022 against a net profit of Rs 76.6 in the year-ago period. Total income rose 31 per cent to Rs 1731.6 for Q2FY23.

Commenting on the financial results, Managing Director and CEO, Mr Ashwani Kumar Arora said, "We are delighted to share that the Company’s market share in India as per AC Nielsen stood at 28.5 per cent up by 180 bps on the back of its marketing initiatives across television, print, and digital media and strong distribution network. Our retail outlet reach also increased by 40 per cent and stood at 1,76,000 outlets. Also, Daawat-consuming households increased by 36 per cent on a YoY basis to 37 Lakh households.

In the year 1978, Mr Vijay Kumar Arora began a small company in the village of Amritsar. India's rice-based food company LT Foods Limited's portfolio now includes a range of brands that include Daawat, Royal and other regional leading brands.