Chaman Lal Setia Exports Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Chamanlal Setia reported H1 FY26 revenue of INR 600 crores with a 9.3% margin, despite a significant INR 150 crore decline in export sales. The company is strategically procuring paddy at low prices, aiming for INR 1,500 crores revenue for FY26, with INR 900 crores expected in H2. Management addressed concerns regarding sales decline due to price sensitivity and geopolitical factors, while also committing to investigate a high inventory-to-sales ratio flagged by an analyst.

Highlights

  • Profitability ratio maintained despite sales decline, indicating strong margin management.

  • Strategic procurement of paddy at low prices, leveraging financial strength to build inventory.

  • New capacities in Karnal and Gandhidham are commissioned and working, enhancing production capabilities.

  • Confidence in achieving FY26 revenue target of INR 1,500 crores, driven by new orders and market conditions.

  • Expansion into new markets and customer segments, including Russia and Saudi Arabia.

Concerns

  • Export sales declined by approximately INR 150 crores in H1 FY26.

  • Customers delaying purchases due to falling rice prices, impacting volume growth.

  • Analyst raised concern about a potentially high inventory to sales ratio (5-6 years) based on annual report data, which management will investigate.

  • Geopolitical issues and US tariffs have impacted export volumes, though management is working to mitigate.

Key financials

3 periods

Q2

  • Domestic Volume
    4,650 tons

H1

  • FY26 Revenue
    ₹600 Cr
  • FY26 Margin
    9.3%

H1 FY26

  • Export Sales Decline
    ₹150 Cr

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

medium confidence
  • Capex Capex disclosed
    • New SORTEX plants in Karnal
    • New unit in Gandhidham
    • Extra SORTEX plant in Mundra
    the demand was growing up. So, we put up the new capacities, these new three SORTEX plants were put in Karnal and one extra in Mundra.
  • Liquidity Liquidity disclosed Company has strong financial strength and significant money deposited in banks, which is being used for rice procurement.
    We have come full financial strength. We had a very huge money deposited in the banks, which we are taking out and putting on the rice.

Guidance & targets

Revenue

  • FY26 Revenue Revenue · FY26 · High confidence INR 1,500 crores
    I'm projecting at least INR 1,500 crore we will definitely achieve.

    — Rajeev Setia, Joint Managing Director & CFO

  • H2 FY26 Revenue Revenue · H2 FY26 · High confidence INR 900 crores
    Yeah, we are confident we'll do. The kind of orders we are getting, kind of new companies are coming to our hands, that's it, yeah.

    — Rajeev Setia, Joint Managing Director & CFO

Margin

  • H2 FY26 Margin Margin · H2 FY26 · Medium confidence grow
    No. I mean, I can project about the coming period, the next six months till March, definitely our sale will grow, our margin will grow.

    — Rajeev Setia, Joint Managing Director & CFO

Inventory

  • FY26 End Inventory Level Inventory · March FY26 · High confidence beyond INR 500 crores
    The present levels projected to go beyond INR 500 crore.

    — Rajeev Setia, Joint Managing Director & CFO

Capacity

  • Revenue Potential with New Capacity Capacity · Low confidence INR 2,000 crores
    Look, the capacity wise, we can achieve INR 2,000 crore if we really have the demand.

    — Rajeev Setia, Joint Managing Director & CFO

What to watch in Q3 FY26

H2 FY26 Revenue Achievement

next quarter
Current INR 600 crores (H1 FY26)
Target INR 900 crores (H2 FY26)

Why it matters

Verifying if the company can achieve its ambitious H2 revenue target to meet the full-year guidance.

So that would mean about INR 900 crores in the second half. You've done INR 600 crores in first half. So, you are getting INR 900 crores in the second half. Yeah, we are confident we'll do.

Risks & concerns

  • Price volatility and decline in rice market

    high

    Gradual decline in rice prices leads customers to delay purchases, impacting sales volumes.

    Management acknowledged

  • Geopolitical issues and US tariffs impacting exports

    medium

    US tariffs caused customers to put orders on hold, leading to a decline in export sales.

    Management acknowledged

  • High inventory to sales ratio

    medium

    Analyst pointed out a 5-6 year inventory-to-sales ratio from the annual report, which management will investigate.

    Analyst not addressed

Q&A highlights

5 direct, 1 evasive
Prior guidance vs. actual Q2 performance Partial
Because the demand in the preceding one, two months were good and we were confident that this quarter will grow. But late in, when the prices started coming down, when the next crop report was very good. So, the customers deferred their contracts or slow buying was there.

Analyst challenged management on a perceived misleading guidance, highlighting the impact of market dynamics on sales forecasts.

Asked by Manish Kela

Impact of Punjab floods on paddy prices and supply Direct
Punjab has area under cultivation for paddy, 32.5 lakh hectares. And this flooding had; it is announced 2.5 lakh hectare. So, 30 lakh hectare is there intact, no damage by flooding. And out of this 2.5 lakh hectares, 30% that particular area where the flooding has happened, about 30%, 35% area is under basmati, rest is with the normal non-basmati rice, parmal, etc.

Clarified that the impact of floods on Basmati rice production was minimal, reassuring about supply and price stability.

Asked by Aayush Khanna

Customer buying behavior and price declines Direct
When the prices gradually keep on going down, the customer waits for the right time to buy. You see what happens, the psychology in the business, not in our industry, in other parts also, when the prices are going up, everybody starts following that product.

Explained the psychological aspect of customer purchasing decisions in a falling price environment, directly linking it to revenue slowdown.

Asked by Aayush Khanna

Customer inventory levels and pent-up demand Partial
No, we never ask the question -- this question, how much stock you have? It's not our prerogative. We don't ask them what exactly they are doing. We push for our own sales. We give them good prices and suggest them to buy.

Management indicated they don't track customer inventory directly but focus on competitive pricing and sales, suggesting a lack of visibility into potential pent-up demand.

Asked by Madhur Rathi

Impact of US tariffs on exports Direct
Because many customers asked us to put the orders on hold. They are waiting something will happen. But so far, it is seesaw going on for the US. But after all they have to eat, you know. It's not taxed by our government; it's their government who have taxed them. They have to eat finally.

Confirmed that US tariffs led to order holds and sales decline, but expressed confidence in eventual recovery due to essential demand.

Asked by Anubhav Mukherjee

H1 inventory decline despite low paddy prices Direct
No, you see, when it's the end of season, a new crop is coming. I mean, September is end, September is end of the season. We try to finish up the existing stock wherever we sell. So obviously, the stock level will come down.

Clarified that the H1 inventory reduction was a seasonal effect of clearing old stock before the new crop, not a change in procurement strategy.

Asked by Anubhav Mukherjee

High inventory to sales ratio (5-6 years) Evasive
I think there is something wrong in your questioning. The inventory, the peak level of inventory was INR 500 crore. And in this particular year, now it has come down.

An analyst highlighted a significant discrepancy in inventory levels from the annual report, which management seemed unaware of and promised to investigate, raising a potential red flag.

Asked by Sahil Malhotra

Status of Saudi client orders Direct
That is almost at maturity state or a complete set of orders have come. But before the commencement or shipping, still some discussions are going.

Provided an update on a significant potential order, indicating it's close to finalization and a key factor for H2 revenue targets.

Asked by Manish Kela

2 min read 5 chapters

Detailed narrative

H1 FY26 Performance Overview and Sales Dynamics

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.

Strategic Procurement and Inventory 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.

Capacity Expansion and Revenue Potential

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 and Tariff Impacts on Exports

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.

Outlook and H2 FY26 Targets

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.

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