Chaman Lal Setia Exports Navigates Market Correction, Eyes Strong H2 FY26

Chaman Lal Setia Exports Ltd., a leading player in the Basmati rice industry, recently announced its financial results for the second quarter and first half of fiscal year 2026. The period was marked by a temporary market-wide pricing correction in global rice prices, which impacted the company's top-line revenue. Despite these headwinds, the company demonstrated remarkable operational efficiency, successfully maintaining its profitability ratios. Management expressed confidence in a market bottom-out and a significant resurgence in demand, setting an optimistic tone for the upcoming quarters.

For Q2 FY26, the company reported net sales of INR 273.0 crore, with a gross profit of INR 56.0 crore and a net profit of INR 18.9 crore. For the first half (H1) of FY26, net sales stood at INR 580.2 crore, gross profit at INR 132.4 crore, and net profit at INR 40.6 crore. While the export sales experienced a decline of approximately INR 150 crore during this six-month period due to customers delaying purchases, the company's ability to preserve its profitability underscores its robust operational framework and strategic resilience in a volatile commodity market.

Strategic Expansion and Market Outlook

The company's long-term growth strategy is gaining significant momentum through strategic capacity expansions. Chaman Lal Setia Exports has added three new packaging facilities in Karnal and successfully relocated its facility to Mundra, incorporating an extra SORTEX plant. Additionally, a new packaging unit in Gandhidham was opened in July 2025, and an old rented unit has been brought in-house and is now ready for trial runs. These investments are designed to enhance productivity and manufacturing efficiency, positioning the company to capitalize on the anticipated demand surge.

Management highlighted that the current low prices for paddy present an opportune time for procurement, and the company is actively buying in large quantities, leveraging its strong financial reserves. This strategic procurement is expected to bolster margins in the coming periods. The company maintains a prudent inventory management approach, building stock in the second half of the fiscal year post-kharif harvest to meet future demand, funded by internal cash and short-term debt.

Operational Excellence and Financial Discipline

Chaman Lal Setia Exports continues to demonstrate operational excellence, reflected in its healthy EBIT margin of approximately 10% and a significantly lower net working cycle of around 188 days compared to its peers. This highlights efficient inventory and receivables management. The company's robust financial health is further evidenced by a strong Return on Equity (ROE) of approximately 14% and Return on Capital Employed (ROCE) of about 17%, matching the best in the industry. A low Net Debt/Equity ratio of around 0.1 underscores its disciplined financial structure, providing ample headroom for future growth.

Navigating Global Trade and Future Prospects

The company's primary focus remains on exports, with its flagship brand 'Maharani' present in over 35 countries and a vast distribution network spanning 90+ nations. While geopolitical issues and tariffs, particularly in the US, caused some temporary order holds, management noted that ocean freights have returned to workable levels, making the export business viable. The increasing global demand for Basmati rice, including from non-traditional consumers in Western markets, presents a significant growth avenue. India's Basmati rice, with its Geographic Indication recognition, enjoys a strong competitive advantage.

Chaman Lal Setia Exports is confident in its strategy and ability to deliver sustainable value. With the market showing signs of recovery, strategic capacity expansions in place, and a disciplined approach to operations and finance, the company is well-positioned to achieve its revenue guidance of INR 1,500 crore for FY26 and pursue further growth in the coming years.