How will LT Foods and KRBL shares be impacted by the US 25% tariff on Iran trade partners?

Synopsis: Two stocks dipped slightly in reaction to the proposed 25% US tariff, which was linked to Iran, although they stabilised eventually. Although the US represents less than 5% of the total exports of basmati rice, Iran remains an essential market with exports estimated at 12-20%.

Geopolitical developments once again put Indian basmati exporters under the spotlight amidst the resurgence of Iran-related trade tensions. A sharp US policy signal sparked short-term volatility in related stocks, raising questions around export exposure, pricing trends, and how resilient global demand can cushion such external shocks.

Tariff announcement and immediate market reaction

The Indian basmati rice exports listed on the Indian exchanges faced some selling pressures as the US decided on imposing a 25% duty on all countries with direct trade relations with Iran. Today, the share price of LT Foods fell by 3% and KRBL by 2% but recovered later in the day. 

Even as the news led to market volatility, it has been stated that the US is actually a small market for Indian basmati rice. It has been estimated that India exported approximately 2.34 lakh tonnes of rice to the US in FY24, which is under 5% of the total basmati exports.

Iran exposure and structural demand drivers

Iran is one of the most important importing countries for Indian basmati rice, with exports of approximately 8.5 lakh tonnes in FY25, which constitutes about 12-20% of the total basmati exports from the country, ranking it second only to Saudi Arabia and Iraq. This is the reason why stocks with higher Middle Eastern exposure, such as KRBL and LT Foods, come into focus whenever there is increased geopolitical tension in Iran.

Essentially, the exporters remain bolstered by favourable demand trends worldwide. India’s rice exports during FY25 stood at 21.55 million metric tonnes, recording an increase of 19.4% from the previous year, indicating overall strength and resilience. LT Foods has emphasised the increased demand for basmati and speciality varieties of rice, as well as value-added variants such as pre-cooked and biryani kits within North America, the European region, and the Gulf countries. KRBL reported export sales of Rs 1,473 crore for FY25, with the ME accounting for an appreciable chunk of the overall basmati export sales.

Impact on KRBL and the rice export market

KRBL reported that its direct exposure to the Iran market is not very significant, to the tune of $8-10 million, which is an indication that it may not be greatly affected by the US’ proposal of a 25% tariff. However, Iran remains a crucial market for Indian basmati exports, though it is viewed as a new risk area that is already overlapped by factors like Iranian domestic unrest. On the other hand, it is reported that basmati prices have softened to Rs 75 per kg compared to levels of Rs 80 per kg, despite 8.5 lakh MT exports to Iran in FY25.

The tariff-triggered volatility highlights how global politics can sway agri-export stocks despite limited direct exposure. With exports growing and demand holding up across key regions, the episode appears more sentiment-driven than structural, though Iran-linked risks and softer prices warrant close monitoring.

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