India, Feb. 10 -- The shares of this company, which is the world's leading basmati rice producer and has fully integrated operations in all aspects of the entire basmati rice value chain, ranging from seed development, contract farming, procurement of the paddy, storage, processing, packaging, marketing, and branding, had its shares in focus as the company launched its Low GI rice, entering into the health-focused staples segment.
With the market cap of Rs 8,446 crore, the shares of KRBL Ltd are trading at Rs 369 and are trading at a PE of 13.9, whereas its industry PE is at 23.6. The shares have given a return of over 90% over the last 5 years.
KRBL enters low-GI rice market with India Gate launch
KRBL Limited has announced the launch of India Gate Uplife Lite Everyday Rice. The announcement signals the company's entry into the low-GI rice segment. Further, the product is positioned under the company's brand portfolio of "Uplife" as a 'health-forward staple product' that ensures the constant release of energy as well as controls blood sugar levels. Here, the company is signalling that it is expanding into more value-added staples with a health-based orientation.
The launch follows a general premiumisation trend in the FMCG industry, wherein rice consumers are gradually looking for food products that also serve as functional food, perfectly complementing health and lifestyle targets while continuing to remain loyal to consumption behaviour. By launching low-GI rice, which happens to be fat-free and trans fat-free, KRBL is targeting the overall awareness of lifestyle diseases and health nutrition.
From a strategic point of view, it is also in line with the vision of KRBL as a diversified food company, as underscored in the company's press release. The products offered by Uplife already include edible oil and other health-focused rice varieties, and with the addition of the current product, the brand has room to position itself as a proactive wellness brand that takes a path to wellness and health that others around it have not taken.
The high brand equity of the India Gate brand will come in handy as the company builds a burgeoning brand in the health staples segment that has long-term growth potential that surpasses its basmati staple business.
Leveraging market leadership to capture low-GI opportunity
KRBL's leadership position in the conventional basmati rice market gives them a strong foundation to capture share in the attractive $4.15 billion low GI rice market. Having 25% market share of branded basmati exports from India and 30% market share of the domestic branded basmati market, the company enjoys strong distribution outreach and retailer relationships, as well as high consumer brand recall.
This existing consumer loyalty associated with the India Gate brand reduces the risk of launching the low GI proposition, as consumers will rather prefer low GI rice from a known brand as opposed to choosing the low GI rice option from a new entrant.
Further, the sheer scale of KRBL's milling capabilities, as well as its supply chain efficiencies, provides the company with the flexibility to quickly expand additional product categories without significant additional investment in infrastructure costs. As the company is able to leverage its existing supply chain to procure the new offerings, the firm is able to leverage the existing customer base with the ability to cross-sell low-GI variants of the existing dominant staple portfolio. As such, the firm is able to benefit from the recently increased global low-GI rice opportunity.
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