CLSEL - Chaman Lal Setia Exports Ltd. Share Price

During the Q3 and nine months FY26 earnings call, Rajeev Setia, Joint Managing Director & CFO of Chaman Lal Setia Exports Ltd, expressed optimism about the company's performance. The management expects to achieve a revenue target of approximately INR 1,500 crores for FY26, indicating confidence based on the sales momentum generated in recent quarters. Setia pointed out that overall sales have considerably improved, with the top six countries showing sales volume increasing from around 15,493 tons to approximately 34,578 tons, marking significant growth. The company has benefited from favorable pricing trends, with increases across various Basmati rice categories such as a 15% rise for certain varieties by December.

Additionally, management highlighted that the latest reductions in U.S. tariffs, from 50% to 19%, present new opportunities for market penetration in the U.S., potentially allowing them to capture more market share against competitors like Pakistan. Setia confirmed that the company is actively participating in international exhibitions and engaging with customers globally to boost sales.

Management also conveyed that procurement costs were relatively stable compared to the previous year, aided by a better crop yield outlook. They expressed that margins achieved in Q3 should be sustainable moving forward, provided market conditions remain favorable. The company plans to continue expanding its domestic market presence and is developing a new product line, "Teasan," which is rice-based tea. The emphasis on selling high-quality products aligns with their strategy to maintain competitiveness and profitability. Overall, the outlook is positive, supported by strong sales efforts and a focus on innovation.

Q&A Section Summary

1. Question: "Was the 10%-15% hike across all Basmati rice categories taken in January or did it affect Q3 export realization?" Answer: "The prices at the start of the season were low. We procured rice in September but realized sales in Q3. Though our export realization didn't show an uptick in Q3, the volumes have increased significantly. The 10%-15% hike will reflect in future quarters."

2. Question: "How do you see the impact of the 19% tariff on your sales in the US?" Answer: "We have regular exports to the US despite previous tariffs. Major customers maintained purchases even with high tariffs, and with the recent reduction, we anticipate quicker business dynamics. The export market has started responding positively."

3. Question: "What is your outlook for achieving the INR 1,500 crore revenue target for FY26?" Answer: "We're working hard and expect this quarter to perform well like preceding quarters. If our sales continue to grow consistently, I am confident we can meet the INR 1,500 crore target."

4. Question: "How are your inventory levels and have they changed alongside the price recoveries?" Answer: "We're actively managing inventory based on demand, procuring wisely without overexposure to market volatility. Inventory levels are sufficient to meet current market requirements."

5. Question: "What segment of revenue is derived from your brands and how does it compare across product lines?" Answer: "Maharani contributes around 8%-9% to revenue, while Mithas and Begum contribute around 10%-15%. Pricing varies as they are lower-priced products designed for different segments."

6. Question: "Can you share insights on your new capacities and their sales contribution?" Answer: "All new plants in Mundra and Karnal are operational, positively impacting our sales this quarter. Precise incremental sales figures are not disclosed, but they have significantly bolstered our output."

7. Question: "How much did the rupee depreciation help your bottom line?" Answer: "Not hedging has worked in our favor historically as the rupee often weakens. We calculate our pricing considering a weaker rupee, thus benefiting in our sales margins without hedging costs."

8. Question: "What percentage of revenue comes from U.S. sales, and do you plan to increase it?" Answer: "Sales in the U.S. are significant, with 20,000 to 30,000 tons being exported annually. Although our focus is diverse, we aim to expand our U.S. market presence in line with demand."

9. Question: "Are you planning any automation to reduce employee costs?" Answer: "I need to analyze that, but lower costs previously could be attributed to seasonal dynamics in labor requirements and efficiencies gained from production improvements."

10. Question: "What plans exist to enhance your branded products' market share?"

Answer: "We are expanding Maharani into 20 countries and increasing online sales. Developing our branding has been prioritized, and we aim for better visibility and higher margins in both domestic and export markets."