Chaman Lal Setia Exports Limited — Q1 FY26 earnings call

Call held 6 Aug 2025

Management summary

Chaman Lal Setia Exports Ltd. reported a challenging Q1 FY26, with revenue decline attributed to geopolitical issues and falling rice prices. Despite this, the company maintained stable margins and remains debt-free. Capacity expansion is underway with two new packing units in Karnal and one in Gandhidham now operational, though utilization is currently at 50% due to market conditions. Management is optimistic about Q2, targeting INR 400 crores in revenue, and is exploring new markets like Russia.

Highlights

  • Q1 FY26 total volume reached 41,255 tons, with exports contributing 33,797 tons.

  • The company is totally debt free, rather deposit with the cash flow. (Rajeev Setia, p13)

  • One plant in Gandhidham was opened on 4th of July. It's regularly working full. (Rajeev Setia, p6)

  • Two out of three new packing units in Karnal are ready. (Ankit Setia, p19)

  • Margins remain stable and are expected to improve with increased revenue. (Ankit Setia, p5)

Concerns

  • Revenue has come down for this particular quarter due to geopolitical issues and falling rice prices. (Rajeev Setia, p4)

  • Prices of rice are going from a higher level to a lower level, leading to a deliberate slowdown in business speed. (Ankit Setia, p3)

  • Domestic market is described as 'absolutely dead' with low demand and difficult profitability. (Ankit Setia, p18)

  • New Karnal plants are operating at approximately 50% efficiency due to current market conditions. (Ankit Setia, p19)

Key financials

  1. Total Volume 41,255 tons +0.21%YoY
  2. Export Volume 33,797 tons

What they filed

Q1 FY27: revenue up 12.7%, net profit up 45.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue369 395 368 307 273 −26%431 +9%428 +16%346 +13%
EBITDA36 40 33 29 24 −33%51 +28%52 +58%44 +52%
Net profit27 29 25 22 19 −30%36 +24%38 +52%32 +45%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex Capex disclosed Entirely through internal accruals without debt (implied by debt-free status)
    • Installation of two new packing units in Karnal (out of three planned)
    • Opening of a new unit in Gandhidham
    In Karnal, we have installed two new packing units out of three. The third one is still not ready. (Ankit Setia, p5); And that Gandhidham unit was opened on 4th of July. So, it's working full. (Rajeev Setia, p6); Investment is not big. It comes to about INR 2.5 crores, INR 3 crore. I'm talking strictly machinery, erection and everything. (Ankit Setia, p9)
  • Debt Gross ₹0 Cr · Net ₹0 Cr · 0.0× EBITDA
    The company is totally debt free, rather deposit with the cash flow. (Rajeev Setia, p13)
  • Liquidity Liquidity disclosed Company is totally debt free, rather deposit with the cash flow, indicating strong liquidity.
    The company is totally debt free, rather deposit with the cash flow. (Rajeev Setia, p13)

Guidance & targets

Revenue

  • Q2 FY26 Revenue Revenue · Q2 FY26 · High confidence INR 400 crores
    Our target is INR 400 crores. (Rajeev Setia, p15)

    — Rajeev Setia

  • Annual Revenue Revenue · Not specified · Medium confidence INR 2,000 crores
    We are trying our best to achieve INR 2,000 crores. That's the target. That's the goal, right? (Ankit Setia, p11)

    — Ankit Setia

Capacity / Revenue

  • Annual Revenue per new packing unit Capacity / Revenue · annually · High confidence INR 100 crore annually
    So, these plants can do a revenue of INR 100 crore annually, each one of them. (Ankit Setia, p19)

    — Ankit Setia

Profitability

  • Margin Band Profitability · Generally · High confidence 9% to 14%
    Generally, the company posts a margin between 9% to 14%. (Ankit Setia, p15)

    — Ankit Setia

What to watch in Q2 FY26

Q2 FY26 Revenue Target Achievement

next quarter (Q2 FY26)
Current Q1 revenue declined (no specific number given)
Target INR 400 crores

Why it matters

Key indicator of recovery from Q1 challenges and management's ability to execute on stated targets.

Our target is INR 400 crores. (Rajeev Setia, p15)

Risks & concerns

  • Geopolitical issues impacting trade

    high

    Geopolitical issues, including the Russia-Iran war and disruptions in Lebanon/Yemen, significantly disturbed Q1 business. (Rajeev Setia, p3)

    Management acknowledged

  • Declining rice prices

    medium

    Prices of rice are moving from higher to lower levels, leading the company to decrease business speed to protect margins. (Ankit Setia, p3)

    Management acknowledged

  • Impact of US tariffs on Indian rice exports

    medium

    New US tariffs could impact exports, though Basmati is considered less vulnerable due to its origin and customer base. (Ravi Sharma, Ankit Setia, p6-7)

    Analyst acknowledged

  • Low profitability in the domestic Indian market

    medium

    The domestic market is challenging with low demand and significantly lower profitability compared to export markets. (Ankit Setia, p17)

    Management acknowledged

Q&A highlights

6 direct
Reasons for revenue decline in Q1 and future price trends. Direct
this quarter has all along been disturbed by geopolitics... The crop is all time high expected for rice. Total 151 million ton is the estimate. So, let's see. (Rajeev Setia, p4)

Explains the primary drivers for the Q1 performance and provides an outlook on future rice prices and crop size.

Asked by Chirag Singhal

Impact of US tariffs on Indian rice exports and competition from Pakistan. Partial
But since Basmati is not grown in US, India is still strong to supply. (Ankit Setia, p7); Look, nowadays Pakistan is a favorable baby of USA. So obviously they may get from them, but the future is much better for us. (Rajeev Setia, p6)

Addresses a significant geopolitical and trade policy risk, clarifying the company's stance and competitive position for Basmati exports.

Asked by Ravi Sharma

Inventory management strategy given falling prices and new crop. Direct
We do have inventory, but not to the levels which it was during 31 March. It is relatively quite down. And it's also sold or likely to sell kind of inventory... We are waiting for the new crop, which is going to open at a lower price. Then we are going to bulk up. (Rajeev Setia, Ankit Setia, p13)

Reveals a cautious inventory strategy aimed at protecting margins in a declining price environment by waiting for lower new crop prices.

Asked by Manish Kela

Status and utilization of new processing/packing plants. Direct
One plant in Gandhidham was opened on 4th of July. It's regularly working non-stop... Two out of three are ready in Karnal. (Rajeev Setia, Ankit Setia, p19); Currently, because we are seeing a decline in the prices, with the new plants, maybe we are running an efficiency of 50%. (Ankit Setia, p19)

Provides an update on capacity expansion and current operational efficiency, linking it directly to prevailing market conditions.

Asked by Navneet Bhaiya

Teething issues with the third new packing unit in Karnal. Direct
No, by teething troubles, what I meant was whenever a new plant is starting, because the plant has series of 15 or 20 machines, right? So at least it takes 15 to 20 days or one month to stabilize the plant. So, the third plant is all set. Only these teething troubles we are taking out. (Ankit Setia, p22)

Clarifies the nature of delays for the final new unit, indicating it's a temporary stabilization process rather than a fundamental problem.

Asked by Yogansh Jeswani

Challenges in the domestic market and profitability compared to exports. Direct
The only challenge I face is profitability is much more when I export. When we are selling in India, the profitability goes down... This is the biggest challenge with India. (Ankit Setia, p17)

Highlights a structural challenge for the company in its home market, explaining the strategic emphasis on export operations.

Asked by Harsh Beria

Strategy for increasing revenue and volume in the future. Partial
Obviously we work hard. We look for new customers. We participate in different exhibitions, travel. And when you get the business, obviously your revenue will go up as well as volume both sides connected. (Rajeev Setia, p13)

Indicates management's approach to growth, focusing on market development and customer acquisition rather than specific new geographies this quarter.

Asked by Pavan Kumar

Clarification on how the company makes money when prices go up or down. Direct
When the procurement of businesses, you buy cheaper and sell expensive. This is how you make the best -- better profit. And if you are buying at high price and it becomes difficult to sell at the high price, you may earn, but your earning could be breakeven or little earning. (Rajeev Setia, p15-16)

Explains the company's fundamental business model and margin protection strategy in volatile commodity markets.

Asked by Vivek Singh

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Chaman Lal Setia Exports Ltd. reported a challenging Q1 FY26, with total volume at 41,255 tons, a marginal increase of 0.21% year-on-year from 41,169 tons in Q1 FY25, but a sequential decline of 8.27% from 44,974 tons in Q4 FY25. Export volume for the quarter stood at 33,797 tons. Management noted a decline in revenue for the quarter, primarily due to geopolitical issues and falling rice prices, but emphasized that margins remained stable.

Market Dynamics and Geopolitical Impact

The company's Q1 performance was significantly impacted by geopolitical issues, including the Russia-Iran war and disruptions in business for Lebanon and Yemen. Management observed a trend of declining rice prices, leading to a deliberate strategy of reducing business speed to protect profitability. The new crop is expected to be abundant, with an estimated total of 151 million tons, which is anticipated to further drive prices down.

Capacity Expansion and Utilization

Chaman Lal Setia has expanded its capacity with new packing units. The Gandhidham unit, opened on July 4th, is fully operational and working at full capacity. In Karnal, two out of three new packing units are ready, with the third unit experiencing minor 'teething troubles' expected to be resolved by August 2025. However, due to the current decline in rice prices, the new Karnal plants are operating at approximately 50% efficiency, with management planning to increase speed when market conditions become more favorable. Each new plant is projected to generate an annual revenue of INR 100 crores.

US Tariffs and Export Strategy

The company addressed concerns regarding new US tariffs on Indian rice. Management stated that Basmati rice, being an Indian product not grown in the US, is less affected by these tariffs. Existing shipments were dispatched before the October 5th tariff deadline, mitigating immediate impact. While acknowledging potential competition from Pakistan, management believes India remains strong in Basmati supply, especially to ethnic customers who are less price-sensitive and allow for contract revisions.

Domestic Market Challenges and Profitability

Management highlighted significant challenges in the domestic Indian market, describing it as 'absolutely dead' with very little demand. Profitability in the domestic market is considerably lower compared to exports, making it difficult to generate revenue. The company has experimented with online channels like Blinkit and Zepto, but these platforms take a large share of the profitability, further exacerbating the challenge. This disparity influences the company's strategic focus on export markets.

Future Outlook and Growth Targets

Looking ahead, Chaman Lal Setia aims for a Q2 FY26 revenue target of INR 400 crores, expecting an increase in overall revenue as market conditions improve. The long-term aspirational goal is to achieve an annual revenue of INR 2,000 crores. The company is actively exploring new export markets, including Russia, where it is engaging with Sberbank and planning to participate in exhibitions to leverage India's trade relations. Management expects margins to remain stable within the historical range of 9% to 14%.

This is an AI-generated summary of a publicly available earnings call transcript.
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