Why Dolly Khanna bought LT Foods Daawat Multibagger

LT Foods Daawat Multibagger

Dolly Khanna has added a new multibagger stock to her portfolio. She has bought the stock in the latest purchase in the period from January 2017 to March 2017.

The name of the stock that Dolly Khanna has bought for her portfolio is Daawat or LT Foods.

Dolly Khanna has bought 29,57,280 shares of LT Foods.

LT Foods or Daawat is already a multibagger stock.

LT Foods offers branded basmati rice, value-added staples and organic food. Its brands ‘Royal’ and ‘Daawat’ enjoy No.1 & No.2 positions in US and India respectively. While Basmati rice remains its core proposition, the Company’s vision is to emerge as a Global Specialty Food Company, admired for its wider range of quality products. Its integrated operations span the entire rice value chain – right from farm to fork. The Company has 5 state-of-the-art manufacturing units in India, 2 packaging facilities in US and in addition deploys 5 more third-party facilities to manufacture high quality food products. LT Foods operations include contract farming, procurement, storage, processing, packaging and distribution. It is also engaged in research and development to add value to rice and rice food products.

Investment Rationale (other than industry triggers)

• Growing demand for organic food, expanding value added portfolio
• JV with Future Consumer to increase domestic demand
• Inorganic acquisitions leading to healthy growth
• Wide distribution network
• Leading brand ambassadors help in increasing recall value

View and Valuation

LT Foods has transformed itself from a B2B player to B2C. It has a strong market presence with its brand ‘Daawat’ and ‘Royal’ are the leader in premium packaged basmati rice in India and US respectively. It has a diversified geographical presence backed by an established marketing network and strong brands. Recently the company has also added organic products and staples to its product portfolio. It has also acquired brands from HUL, further strengthening its presence in the Middle East and North American markets. LT Foods is amongst the largest basmati rice exporter which has high barriers to entry. It is the largest basmati rice player in North American markets where the demand for basmati rice has been increasing. With Iran expected to lift its ban on imports of basmati rice and China also looking to import rice from India, demand is expected to pick up and falling prices are likely to be arrested. We feel investors could buy the stock at the CMP and add on declines to Rs 325-335 band (5.5x FY18E EPS) for sequential targets of Rs 400 (6.75x FY18E EPS) and Rs 445 (7.5x FY18E EPS) in 2-3 quarters.

So, Dolly Khanna latest purchase for her portfolio looks like a multibagger stock.

Click here to download research report on LT Foods Daawat by HDFC Securities

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