A release issued by the company said that the upgrade reflects continuous improvement in the group’s business and financial risk profiles. The group has achieved operating income of Rs 3,499 crore in first nine months of fiscal 2021 compared to Rs 2,948 crore in first nine months of fiscal 2020, which was aided by higher volumes achieved in both rice and organic business despite the impact of the Covid-19-induced lockdowns on the HORECA segment especially in first half of fiscal 2021.
EBIDTA (earnings before income, depreciation, tax and amortisation) 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, aided by higher realisations in the rice business, especially in the first quarter of fiscal 2021 and change of product mix towards high-margin products. Going ahead, CRISIL Ratings expects the business risk profile to continue to improve over the medium term. The financial risk profile has also improved as is reflected in debt-to-EBITDA of 2.2 times as on December 31, 2020 which is well below CRISIL Ratings’ expectations of maintaining the aforementioned ratio of 3 times over the medium term. CRISIL Ratings expects the ratio to remain below 2.5 times over the medium term despite increase in revenues.
The ratings continue to reflect the LT Foods strong market position in its segment – specialty basmati rice and consumer food business, resulting in sales growth, margin expansion and strengthening of financial metrics. The ratings also factor in the group’s diversified geographical reach through strong leading brands (Daawat in the Indian market and Royal in the US market), established marketing and distribution network and strengthened financial profile, a release issued by the company said.