Chaman Lal Setia: Q3 FY26 Export Surge & Strategic Growth

Chaman Lal Setia Exports Ltd. (CLSEL), a prominent player in the Basmati rice industry, has reported a significant turnaround in its Q3 and 9M FY26 performance. The company's strategic initiatives and a favorable market environment have driven robust growth, particularly in its export segment. For the nine months ending December 31, 2025, CLSEL recorded Net Sales of INR 1,011.2 crore. The third quarter alone saw a drastic surge in export volumes to 48,965 metric tons, marking it as one of the best quarterly sales in a long time. This strong performance underscores the company's ability to adapt to global dynamics and capitalize on market opportunities.

The impressive export volume growth was complemented by a highly favorable pricing environment. Management successfully implemented a price hike of 10-20% across premium Basmati categories, specifically for the 1509 and 1718 variants (Steam and Parboiled). This pricing power, combined with the benefits of operating leverage, propelled the company's EBITDA to approximately INR 10 per kg. This translated into a robust 13.6% year-on-year improvement and a stellar 31.0% quarter-on-quarter growth in EBITDA, demonstrating effective conversion of volume momentum into superior bottom-line expansion. The company's Gross Profit for 9MFY26 stood at INR 227.8 crore, with a Gross Margin of 22.53%, while Net Profit reached INR 76.5 crore, yielding a PAT Margin of 7.57%.

Strategic Initiatives and Market Outlook

Chaman Lal Setia Exports is not resting on its laurels. The company is actively pursuing several strategic initiatives to sustain its growth trajectory and enhance its global footprint. A significant structural tailwind identified is the reduction of U.S. import tariffs on Basmati rice from 25% to 18%. This change is expected to lower the landed cost of their premium Basmati, significantly strengthening their competitiveness in the U.S. market. Management is confident in sustaining growth, further enhancing margins, and expanding its global reach.

In terms of new product development, CLSEL is innovating with 'Teasan', a tea made from rice, which has shown promising health benefits in government lab tests, including cholesterol reduction and liver/colon correction. This new vertical is planned for international and Indian market launch after human trials are completed. The company is also focusing on strengthening its domestic market presence for its own brands, such as Maharani, Mithas, and Begum, to mitigate risks associated with geopolitical uncertainties affecting international trade. While Maharani currently contributes 8-9% to total revenue, and Mithas and Begum contribute 10-15%, the company aims to increase these figures and reduce reliance on international markets.

Operational Excellence and Financial Prudence

CLSEL's operational excellence is evident in its healthy margins and lean working capital cycle. The company maintains an EBIT margin of approximately 10%, a testament to its operational resilience and competitive standing. Its Net Working Cycle of ~188 days is significantly lower than peers, highlighting efficient inventory and receivables management. Furthermore, a Net Debt/Equity ratio of ~0.1 demonstrates strong financial discipline and a robust capital structure, providing ample headroom for future growth and investments. The company's fully integrated farm-to-fork operations, from procurement in Basmati growing areas to state-of-the-art processing facilities and a global distribution network, underpin its efficiency and quality control.

Management acknowledged that preceding quarters were not as strong, attributing it to sales team lethargy, which was promptly addressed through active engagement and participation in international exhibitions. This proactive approach led to the strong Q3 recovery. The company also maintains a prudent inventory management strategy, avoiding aging stock and thereby minimizing inventory risk. With new packing units already operational and a modest CapEx of INR 5-10 crore planned for future enhancements, Chaman Lal Setia Exports is poised for continued growth. The management remains confident in achieving INR 1,500 crore revenue for FY26 and sustaining Q3 margins, driven by hard work, new avenues, and a focus on being investor-friendly.