LT Foods Limited announced that CRISIL Ratings has upgraded its long-term rating on bank facilities totaling Rs.880 Crore to ‘Crisil AA/Stable’ from ‘Crisil AA-/Positive’. The short-term rating was reaffirmed at ‘Crisil A1+’. The upgrade reflects sustained improvement in the business risk profile, driven by strong market position in the basmati rice industry, healthy brand recall, and a robust financial risk profile with expected low leverage.
Credit Rating Upgrade Announcement
LT Foods Limited has formally intimated the stock exchanges regarding a significant rating action taken by CRISIL Ratings Limited. Following due consideration, the rating agency upgraded the company’s long-term credit rating to ‘Crisil AA/Stable’ from the previous rating of ‘Crisil AA-/Positive’. Concurrently, the short-term rating was reaffirmed at ‘Crisil A1+’.
Facilities Rated and Action Summary
The ratings cover the Total Bank Loan Facilities Rated amount of Rs.880 Crore. The key actions are summarized as follows:
- Long Term Rating: Crisil AA/Stable (Upgraded)
- Short Term Rating: Crisil A1+ (Reaffirmed)
This information was officially received by the Company on February 25, 2026.
Detailed Rationale for Rating Upgrade
Strong Business Profile
The upgrade stems from a sustained improvement in the business risk profile, largely attributed to the group’s strong market position in the basmati rice industry, diverse geographical reach spanning over 80 countries, and established distribution network. The group achieved operating income of Rs 8,039 crore in the first nine months of fiscal 2026, and full-year revenue is projected to reach Rs 10,500-11,000 crore.
Key strengths include a diversified product portfolio, strong brand equity (flagship brands being Daawat and Royal), and successful revenue generation across all channels including general trade, HoReCa, and e-commerce.
Robust Financial Risk Profile
The financial risk profile is characterized by expected low leverage. The expected debt/EBITDA ratio is projected to be between 0.6-0.7 times as of March 31, 2026. Net worth is anticipated to grow to Rs 4,300-4,400 crore by the end of fiscal 2026, driven by healthy reserve accretion.
Debt protection metrics remain healthy, with interest coverage expected at 10-11 times in fiscal 2026. The financial risk is expected to remain healthy going forward, supported by no significant debt-funded Capex or acquisitions.
Key Constraints
The ratings are partially offset by two primary factors:
- Susceptibility to Volatile Raw Material Prices: Paddy constitutes 65-70% of sales cost, exposing profitability to price fluctuations.
- High Working Capital Intensity: The business requires high inventory levels (around 200 days) due to the seasonality of paddy and the need for 12-24 months of aging for basmati rice.
Liquidity Assessment
Liquidity is assessed as Strong. Expected net cash accruals of Rs 800-900 crore annually are more than adequate for incremental requirements and debt repayment. The group also anticipates receiving an insurance claim of Rs 265 crore against a bank guarantee.
Outlook and Consolidation
The Outlook assigned by CRISIL Ratings is Stable. This reflects the expectation that the group will continue to benefit from its established market position and strong financial footing.
The analysis combined the profiles of LT Foods Ltd (LTF) and its key subsidiaries, including Daawat Foods Ltd (DFL) and Nature Bio Foods Ltd (NBFL), due to common business lines and significant financial linkages.
Source: BSE
