Overview

Chaman Lal Setia Exports Ltd. with its flagship brand “Maharani” basmati rice is one of the most trusted basmati rice company in India due to its honest dealings and fair business practices. It holds a strong nation wide presence along with its substantial presence in more than 83 countries and packaging private label brands in numerous markets around the world. Core principles of Chaman Lal Setia exports Ltd. are integrity, trust, honesty and fair dealings. In 1974, the company started rice milling and established its first factory in 1977 in Amritsar,
Punjab (India). The company started its exports in 1982 and got recognized as an export house by Ministry of
Commerce, Govt. of India in 1989. The company gets an eagle eye view over 140 grain markets spread over 4000 sq.km of rice producing area.

Chaman Lal Setia Exports Ltd. got listed on the National Stock Exchange of India. Its public issue came on 07 March 1995.

Outlooks and Triggers

• Rice as one of the alternate to wheat is having positive outlook as wheat production in Ukraine is
  expected to decline 41% to 13.5 million tonnes in 2022 23 season from around 19.5 million tonnes
  in last year as reported by US Department of Agriculture in its report.
• Bangladesh who is fourth largest producer and consumer of rice recently slashed import duty and
  tariffs on rice from 62.5 per cent to 25 per cent and also signs ‘deals’ with India, other nations to
  import 3.2 lt of rice.
• Raw material (paddy) constitutes 75 80% of the sales, and rise in rice prices to have positive
  impact on its operating profitability.
• Majority of the exports by CLSE are under customers’ brands (private label business). To maintain
  quality, customers continue to procure their requirement from CLSE; this helps in maintaining
  margin.
• Though, low brand penetration currently limits the ability to charge high margin in comparison
  with industry players such as KRBL Ltd.

Valuation and View

CLSE will be benefitted immensely with the ongoing shortage of food grains prevailing in the world. CLSE enjoys high reputation among its customers and have export network of more than 80 countries in the world. Margins
are expected to improve due to rising rice prices. CLSE currently trades at 6x 1Yr Fwd P/E. We value company at 8x FY24E (5Yr avg =7.7x ) with a Target of Rs . 210, We recommend to buy.

Disclaimer

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For enquiries, contact:
ROHIT MEHTA
SEBI REGISTERED RESEARCH ANALYST
INH100009080
Mobile No. 8194864567