Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues grew by a remarkable 38% year-on-year to INR363 crores.
- Export volume increased by 38% year-on-year to approximately 35,000 metric tonnes.
- Domestic business grew by 70%, improving its share to 13% of overall business.
- The company has a strong liquidity position with INR150 crores of cash and liquid investments and is almost debt-free.
- The Board has approved a buyback of 2 million shares at INR300 per share, demonstrating confidence in the company's future prospects.
Negative Points
- Geopolitical tensions and shipment disruptions impacted the quarter.
- Margins were affected by the softening of basmati prices and geopolitical issues, with EBITDA margins standing at 8.9%.
- New contracts were negotiated at relatively lower spreads due to supply chain disruptions.
- Freight costs have been rising, impacting profitability.
- The company faces competitive pressure from Pakistan due to lower minimum export prices (MEP) set by the Pakistani government.
Q & A Highlights
Highlights of Chaman Lal Setia Exports Ltd (BOM:530307, Financial) Q1 FY25 Earnings Call
Q: The buyback of INR60 crores at INR300 per share, is it an open market buyback or a tender route buyback? And will promoters participate?
A: Promoters are participating in this buyback, and it is tender-based.
Q: What was the increase in realization and volume in the domestic market?
A: Domestic sales grew by 70%, resulting in an improvement in share to 13% of overall business. The volume increase in the domestic market was also 70%.
Q: Can you provide an update on the new packaging units?
A: The first unit will be operational in the next two to three months, with the second and third units following every three months. By the end of the year, we expect a significant jump in revenues.
Q: What caused the drop in realization per kg in the export market?
A: The drop was due to increased logistic costs and buyers negotiating harder. However, new raw material is coming at a reasonable price, and we expect better profitability in the future.
Q: What kind of EBITDA margin or per-kg EBITDA is reasonable for the year?
A: We aim for an average margin of INR10 per kilogram. Despite recent challenges, we expect conditions to improve, leading to better margins.
Q: What are the expected additional revenues from the new packaging units?
A: Each unit can potentially add INR150 crores in revenue per quarter at full efficiency, with a more conservative estimate of INR70-80 crores per quarter.
Q: Is there any plan to diversify beyond rice?
A: Currently, we see significant opportunities within the rice business itself. We aim to increase our revenue from INR1,400 crores to INR1,800 crores by enhancing our packing capabilities.
Q: How will the geographical indicator (GI) status denial by Australia and New Zealand impact the industry?
A: The denial is due to the joint heritage of basmati rice between India and Pakistan. India has filed an appeal, and we expect the situation to be resolved favorably.
Q: What are the implications of Punjab's incentives for shifting from paddy to other crops?
A: The shift is primarily from non-basmati to basmati to save water. The area under basmati in Punjab is expected to increase significantly, which should not pose a threat to basmati production.
Q: What are the expected margins for FY25?
A: Historically, our EBITDA margins range between 8% to 14%. We expect to be on the higher end of this range in the coming quarters as conditions improve.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
