Chaman Lal Setia Exports Ltd (CLSE)

Good set of results from Chaman lal Setia, sales increased by 62% and profits became 2.3x. Its interesting that they are trading at 7.7x PE despite such growth. I am sharing the concall notes below.

FY23Q3 concall notes

  • Paddy prices have gone up by Rs. 10 this year
  • Have done very well in Germany, Israel and Egypt in 9MFY23
  • Have entered newer markets (Kazakhstan, Turkmenistan)
  • 6-7% sales from own brand in International markets. Domestic sales is in own brand
  • Niche is that they have a very large customer base. Profitability comes from smaller customers and smaller packet sizes (< 10kg) as they pay more
  • Most exports are under 10kg packaging
  • All exports are sold under ECGC (Export Credit Guarantee Corporation of India). Extend credit only to those customers with whom they have very long term relationship (2-3% of overall business)
  • Will not acquire a company from this industry, instead looks for suppliers whose financials are getting weaker to take over their customers
  • Don’t do any business in Iran
  • Have large businesses in Canada and USA, are FDA certified
  • Sales go up during Ramadan period
  • Have been participating in a lot of exhibitions to get new business

Disclosure: Invested (position size here, no transactions in last-30 days)