Summary
Chaman Lal Setia Exports Ltd. - Q3 FY26 Earnings Call Summary Friday, February 13, 2026
Event Participants
Executives 1 Rajeev Setia (Joint Managing Director & CFO)
Analysts 5 Akash Bhalla, Anubhav Mukherjee, Madhur Rathi, Manish Kela, Navneet Bhaiya
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (9M FY26) | ~₹1,100 crores | Tracking in line with 9M FY25; management aims for ₹1,500 crore full-year target. |
| Export Volume (Top 6) | 34,578 metric tons | +123% YoY; significant jump from 15,493 tons in the preceding year’s period. |
| Sales Realization | 10% - 15% increase | Prices hiked across all Basmati categories due to 15-20% lower crop size and global demand. |
| Inventory Value | ~₹550 crores | Strategic procurement at lower price points in Sep/Oct utilized to buffer Q3 margins. |
| Debt (HDFC Bank) | ₹2 crores | Massive reduction from ₹300 crore limit; management utilizing lower-cost PNB funds. |
| Debt (PNB) | ₹50 crores | Actively used due to lower interest rate (6.60%) vs HDFC (7.20%). |
| Employee Cost | ₹2 - ₹3 crores | Significant reduction from ₹7 crores YoY; management to analyze specific drivers. |
Geographic & Segment Commentary
- USA & North America: Benefiting from a reduction in US tariffs from 50% to 19%; management expects business to accelerate as high-cost inventory clears. The company exports 20,000 to 25,000 tons to the US market.
- Middle East & Dubai: Dubai acts as a major hub for re-exports; current geopolitical tensions (Israel-Iran) are being monitored closely. High-value brands like Maharani are expanding registration across 20 countries.
- Domestic (India): Currently contributes a small portion of revenue; management plans to focus on brand equity and distribution to hedge against geopolitical export risks. Online sales are showing gradual growth.
Company-Specific & Strategic Commentary
- Brand Strategy (Maharani): Maharani contributes 8-9% of revenue with 50% of its sales coming from high-margin 1kg and 5kg small packs. Management is applying for global trademark protection to prevent infringement.
- Product Innovation (Teasan): Launching “Teasan,” a rice-based tea alternative with cardamom and fennel; lab tests show potential for cholesterol and liver health benefits. The product will be sold online and internationally after human validation trials.
- Operational Efficiency: Modernizing plants in Karnal and Mundra with auto-filling and auto-sealing machines. Maintenance and capacity capex of ₹5-10 crores is planned.
- Currency Strategy: The company maintains a 100% unhedged position on USD; management factors a ₹1.00-1.50 safety margin below spot rates when pricing exports to capture rupee depreciation benefits.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue | ₹1,500 crores (FY26) | Management remains confident based on Q3 performance and strong Q4 momentum. |
| Margins | Sustainable levels | Q4 margins expected to mirror Q3 due to absence of adverse pricing triggers. |
| Domestic Growth | Strategic Focus (1-2 years) | Plan to build a robust distributor network in India to offset international volatility. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Instability | Ongoing conflicts in Israel, Palestine, and Iran threaten logistics and demand in key export belts. |
| Raw Material Volatility | 15-20% lower crop size has driven up paddy prices; mistiming procurement could squeeze margins. |
| Distribution Competition | Large players like KRBL (India Gate) and LT Foods (Daawat) have massive marketing spends, making domestic entry expensive. |
Q&A Highlights
Pricing & Realization
- Question: When will the 10-15% price hike reflect in realizations given Q3 was flat? (Anubhav Mukherjee)
- Answer: Q3 volumes for top countries doubled to 34,500+ tons; profitability improved because we procured early at low prices (Sep) and sold into a rising market (Oct-Dec) (Rajeev Setia).
Banking & Liquidity
- Question: Why has the company almost zeroed out HDFC bank borrowings? (Purav Patel)
- Answer: We have ₹300Cr limit but only used ₹2Cr; we shifted to PNB for lower 6.6% interest and used internal accruals to save 24% via cash discounts on rice procurement (Rajeev Setia).
New Product Verticals
- Question: Are there plans for new rice-related verticals like rice-based powder? (Madhur Rathi)
- Answer: We have developed “Teasan,” a rice-based tea with scientists; it corrects liver and cholesterol in animal tests. Human tests are ongoing for official health claims (Rajeev Setia).
US Market & Tariffs
- Question: How will the 19% tariff reduction impact sales? (Akash Bhalla/Madhur Rathi)
- Answer: High-cost stock is still in US warehouses; once cleared, lower tariffs will allow us to be more competitive against Pakistan, though both countries currently face similar duties (Rajeev Setia).
Key Takeaway
Chaman Lal Setia Exports recorded a strong recovery in Q3 FY26, characterized by a 123% volume jump in top export markets and successful price hikes of 10-15% across Basmati varieties. Strategic procurement during September/October allowed the company to maintain high margins despite a 15-20% reduction in the overall crop size. The management is aggressively deleveraging, reducing HDFC bank debt from ₹300 crores to near zero by utilizing internal accruals and lower-cost PNB funds. Strategically, the firm is pivoting toward high-margin small packs (50% of Maharani brand sales) and diversifying into health-wellness products like “Teasan.” While geopolitical risks in the Middle East remain a watch point, the reduction in US tariffs and a stable domestic outlook support the management’s confidence in achieving the ₹1,500 crore revenue target for FY26.
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