Could this Indian food pantry get a Nestle-like bounty? Discover…

October 29, 2025

In 2015, Maggi was not only synonymous with instant noodles, but also with instant food.

10-minute deliveries were unheard of back then. And no meal delivery from a nearby restaurant can happen as quickly as ‘2-minute Maggi’.

So when Nestle’s Maggi was banned by food regulator FSSAI in June 2015 for allegedly containing lead in excess of permissible limits, it wasn’t just India’s confidence in instant food that was shaken. It shook the confidence that stock markets placed in multinational food companies such as Nestlé.

The entity was forced to withdraw the product from the market. And the stock price collapsed by more than 10% in just a few days. However, Nestle India changed its strategy and went for a phased relaunch. The company improved food safety standards, accelerated innovation with numerous new products, and ultimately regained more than 50% of its market share

Since the pandemic, there has been increased awareness about food safety, chemical residues and long-term health, especially when it comes to ready-to-eat foods.

Indian consumers now associate organic foods with lower pesticide exposure and better nutritional profiles. Several leading food brands are now prioritizing preventive healthcare through their offerings.

As India’s middle class grows and their disposable incomes rise, purchasing organic food products is seen as an investment in health.

Therefore, entities offering ‘organic food’ in India are at an inflection point.

Organic products have a significant price premium (often 30-100% higher). This ensures that the products add more value to the food companies.

Urban consumers in India are now more exposed to global food trends. Additionally, the influence of social media and advertisements emphasizing clean eating have emphasized the benefits of organic foods.

Modern retail chains and e-commerce platforms have also made organic products readily accessible.

Increased media coverage of the overuse of fertilizers and pesticides in conventional agricultural practices has led to fear and distrust regarding the safety of mainstream products.

The megatrend of growth in organic food will therefore continue. And companies that have managed to adapt their product profiles to this trend have a long runway.

Take the case of premium rice producer LT Foods (which owns the popular Daawat brand). The company has a large network of farmers. It maintains contact with farmers not only in India, but also in Uganda for the purchase and export of its organic products.

Over the years, the company has built a strong network of organic farmers and farmland, spanning over 60,000 organic farmers and over 94,000 hectares of organic farmland in India.

The network in India extends from the foothills of the Himalayas (Haryana, Punjab and Uttarakhand) to Central India (Uttar Pradesh and Madhya Pradesh) and into the southern regions.

The company is also building its network in Africa, distributing more than 14,700 organic farming families and more than 10,000 hectares of certified organic cultivation.

In conjunction with this, the company recently announced capacity expansion in Rotterdam, Netherlands, which will not only serve as a processing and export hub for Europe. The new capacity will help LT Foods serve mainstream supermarkets and health food stores in Europe with climate-friendly supply chains.

More importantly, LT Foods is strategically diversifying its business beyond traditional rice into high-growth, high-margin segments such as organic foods and ingredients, as well as ready-to-eat and ready-to-eat products, which align with evolving consumer preferences around health, convenience and sustainability.

With its integrated farm-to-fork approach and continued investments in brand building, distribution and new product development, the company is well positioned to benefit from the shift from branded to unbranded organic food products globally.

LT Foods products are sold in more than 80 countries through a strong distribution network of 1,800 distributors and more than 150,000 points of sale.

The company recently set up a new production facility in Britain and appointed a distributor for Saudi Arabia (the world’s largest basmati rice market). It aims to achieve Rs 10 billion in revenue each from Britain and Saudi Arabia in five years.

It is also investing in facility expansions in the US, UK and Saudi Arabia, with planned investments for FY26 in the range of Rs 1.5-2.0 billion.

The company has strategically transformed from a B2B (business to business) exporter to a B2C (business to consumer) player through its ‘Daawat Ecolife’ range. With this organic offering, LT Foods is targeting higher margins and expects significant B2C sales growth in five years.

The transition to a B2C model allows LT Foods to leverage the incremental margin previously shared with distributors and retailers.

Should organic food stocks be on your watchlist?

Compared to basmati rice peers KRBL, LT Foods stock has delivered premium valuations in recent years thanks to a focused growth approach and a better corporate governance track record.

Comparison with peers

That said, premium valuations would be sustainable if LT Foods is successful in executing its growth plans with margin expansion targets over the next four years.

The company is expected to continue growing at a moderate pace while keeping its balance sheet intact.

Investors should evaluate the company’s fundamentals, corporate governance and stock valuations as key factors when conducting due diligence before making investment decisions.

Have fun investing.

Kind regards,

Tanushree Banerjee
Editor, StockSelect
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)