Chamanlal Setia

Chamanlal Setia reported H1 FY26 revenue of INR 600 crores with a margin of 9.3%. Export sales experienced a decline of approximately INR 150 crores during this period. Management attributed the sales slowdown primarily to falling rice prices, which led customers to delay purchases in anticipation of further drops. Despite the volume challenges, the company emphasized that its profitability ratio remained 'almost okay, perfect', indicating effective margin management.

Leveraging the current low paddy prices, Chamanlal Setia is undertaking significant procurement. The company stated it has strong financial strength, utilizing substantial bank deposits to fund this large-scale buying. Management projects that inventory levels will surpass INR 500 crores by March FY26, up from a peak of INR 500 crores in March '24. This strategy aims to capitalize on favorable input costs for future sales, although an analyst raised a concern about a high inventory-to-sales ratio from the annual report, which management promised to investigate.

The company has recently commissioned new capacities, including three SORTEX plants in Karnal and an additional unit in Gandhidham, which became operational in July. An old rented unit is also being brought into production. While the current FY26 revenue target is INR 1,500 crores, management believes that with full demand, the new capacities could support a revenue potential of INR 2,000 crores. This expansion positions the company for higher volumes once market demand stabilizes.

Geopolitical issues, particularly US tariffs, have significantly impacted export volumes, causing many customers to put orders on hold. Despite this, management noted that sales to the US have not halted entirely, merely slowed down. The company is actively engaging with customers, including sending its Joint Managing Director & CFO to the US, to encourage buying and navigate the tariff environment. Management expressed confidence that essential demand would eventually lead to resumed purchases.

For the full fiscal year 2026, Chamanlal Setia is confident in achieving a revenue of INR 1,500 crores. This implies a substantial acceleration in the second half, targeting INR 900 crores, following INR 600 crores in H1. Management also anticipates margin growth in H2 FY26, driven by the strategic procurement of raw materials at lower prices and an expected increase in demand. New orders and expansion into markets like Russia are expected to contribute to this growth.